Markets Disappointed, UK Inflation Readings Unexpected! - Kakiforex.com - Financial Market Media No. 1 in the World Markets Disappointed, UK Inflation Readings Unexpected! Markets Disappointed, UK Inflation Readings Unexpected!

March 25, 2021

Markets Disappointed, UK Inflation Readings Unexpected!

 UK inflation unexpectedly recorded a decline in February, dragged down by falling prices for clothes, used cars and toys while the country was still under tighter sanctions.


The annual consumer price index (CPI) declined to 0.4% in February from 0.7% recorded in the previous month, according to data published by the Office for National Statistics (ONS).


While annual core inflation (excluding energy, food and beverage prices), also recorded a decline to 0.9% from 1.4% in the previous month.


This disappointing reading is likely to raise questions about how quickly inflation will reach the central bank’s target.



The Bank of England (BOE) previously expected the UK inflation rate to rise close to its 2% target by the end of the year following higher energy prices and a rising services sector as the economy reopens.


This forecast impacts the debate over when the BOE will withdraw its easing for the economy. Inflation remained below the central bank’s 2% target for 1 and a half years.


The pound plunged to a six -week low, and traded around 1.36800 against the US dollar in the European session after the publication of UK inflation data, as well as being affected by the strengthening greenback.


Another market -focused data namely the UK and European Zone manufacturing and services PMI report will be published this afternoon. If the recorded reading is weak, the pound trades could fall lower.