Previous Trading Days Events 17 Jan 2024

Instead of a lower than the previous figure, the actual inflation figure reported yesterday for the U.K. was higher, rising to 4.0 from Novembers morethantwoyear low of 3.9.

Expectations for when rate cuts could be implemented changed immediately. A roughly 60 chance that the Bank of England BoE would start to cut rates by midMay, down from just over 80 late on Tuesday.

Inflation began to fall faster than expected in the latter months of last year, a surprisingly large drop giving the impression that it would be back at the BoEs 2 target by April or May this year. However, these data change everything.

The rise in Britains inflation rate in December followed increases seen in the Eurozone and the United States and unlike earlier in 2023.

Michael Saunders, a former BoE policymaker The bigger picture is that inflation is falling more sharply overall than the Bank of England had expected a few months ago, he said. Their thoughts will be starting to turn towards interest rates possibly coming down later this year perhaps starting around the middle of the year.

Core inflation which excludes volatile food, energy, alcohol and tobacco prices was unchanged 5.1 in December.  Services inflation increased to 6.4 in December from 6.3 in November.

Source

httpswww.reuters.comworldukukinflationraterises4december20240117

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