UK CPI increased by 0.9%, less than expected

Tuesday, Nov 15 2016

The Consumer Prices Index (CPI) rose by 0.9% in the year to October 2016, compared with a 1.0% rise in the year to September. Although the rate was slightly lower than in September 2016, it remained higher than the rates otherwise seen since late 2014. The main downward contributors to the change in the rate were prices for clothing and university tuition fees, which rose by less than they did a year ago, along with falling prices for certain games and toys, overnight hotel stays and non-alcoholic beverages. These downward pressures were offset by rising prices for motor fuels, and by prices for furniture and furnishings, which fell by less than they did a year ago.

The price of goods bought and sold by UK manufacturers, as estimated by the Producer Price Index, rose again in the year to October 2016. This is the fourth consecutive increase following 2 years of falls and the largest increase since April 2012. Between September and October, total output prices rose 0.6%, compared with an increase of 0.3% the previous month. Factory gate prices (output prices) for goods produced by UK manufacturers rose 2.1% in the year to October 2016, compared with a rise of 1.3% in the year to September 2016. Core factory gate prices, which exclude the more volatile food, beverage, tobacco and petroleum products, rose 1.9% in the year to October 2016, compared with a rise of 1.4% in the year to September 2016.

Sterling is currently being traded below 1.2450 handle. Pair is likely to find support around 1.2380 area and resistance above 1.25 level.

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