On Tuesday, from the UK, CPI and PPI data was released. The rate of inflation faced by households has fallen to a 12-year low. The Consumer Prices Index increased by 1.0% in the year to November 2014, down from 1.3% in the year to October. Analysts were forecasting 1.2% increase. The last time the rate was as low as 1.0% was September 2002 and it was last lower than this in June 2002 when 0.6% was recorded.
PPI Input fell by 1.0%, almost in line with market predictions. Input price annual inflation fell 8.8% in the year to November, compared with a fall of 8.4% in the year to October.
Wednesday's European part of the session was marked by UK job figures and BoE Meeting Minutes. According to the latest release Claimant Count was down by 26,900 from October 2014, beating market expectations on decrease by 19, 400. It was also down by 368,000 from a year earlier, but 121,700 higher than the pre-downturn trough of 778,400 for February 2008. On the other hand unemployment rate for those aged 16 and over for October 2014 was 6.0%, up from 5.9% in September. Analysts were anticipating no change. Total pay for employees in Great Britain was 1.4% higher than a year earlier, above market forecasts on 1.3% growth.
BoE released its Meeting Minutes from their latest meeting. Minutes showed that BoE decided to keep interest rates at a record low this month with majority of members stating that “promising” pickup in wage growth wasn’t enough to raise concerns about the outlook for medium-term inflation. ''As yet, pay growth was only roughly in line with, rather than in excess of'', officials said in the minutes.
As it was last month, for two Committee members Martin Weale and Ian McCafferty, a rate increase now was justified. They said policy makers should look through the short-term price movements that had pushed inflation down to 1 percent, and a drop in unemployment was “consistent with the rapid absorption of slack.” They also said it was possible that the “real rate of interest consistent with stable inflation over the medium term was now rising.”
Thursday's session was marked by UK Retail Sales figures. UK Retail Sales beat market expectations on 0.3% increase and increased by 1.6% compared with October 2014. There was growth in all main store types for the first time since December 2013. Average store prices fell by 2.0% in November 2014 compared with November 2013, this was the largest fall since August 2002 when prices also fell by 2.0%. The largest contribution to the year-on-year fall once again came from petrol stations, however, prices in food stores showed their largest fall since June 2002, decreasing by 1.0%.
From the UK, on Friday, Public Sector Net Borrowing and CBI Realized Sales survey figures were released. Public sector net borrowing was £13.4 billion in November 2014, below expected figure of £14.1 billion and a decrease of £1.6 billion compared with November last year. This additional borrowing needed to balance the public sector’s accounts means that between April and November 2014 the public sector borrowed £75.8 billion, a fall of £0.5 billion compared with the same period last year, as illustrated above.
Latest CBI survey on Realized Sales showed that 71% of respondents reported sales volumes up on a year ago, while 9% said they were down, giving a rounded balance of +61%, well above the +30% that had been expected and the highest balance since January 1988 (+67%).
This week markets will be looking at:
Current Account (Tuesday 10:30)
BBA Mortgage Approvals (Tuesday 10:30)
Final GDP (Tuesday 10:30)
