Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

CPI resumes slide after Easter spike

CPI resumes slide after Easter spike

Consumer price Inflation resumed its long-term slide in May, falling back to 1.5% after April’s brief Easter-related spike to 1.8%.

Emphasising the rebasing effect of the 2013 figures on this year’s relatively late Easter holiday, falls in transport costs, particularly air fares, were a large contributor to the fall.

Excluding April, CPI inflation has now been sliding for 12 months from a peak of 2.9% in June last year, against a wider backdrop of moderating resource prices and a relatively strong pound.

Output inflation also continued to moderate with core factory gate prices up 0.5% compared to 0.6% in the 12 months to April, in a demonstration of the weakness of pressure across the supply chain.

Capital Economics’ UK economist Samuel Tombs said that the continued weakness of inflation suggested that recent hawkishness from Bank of England policymakers may not be sustained.

‘We believe the MPC is likely to tread cautiously and raise interest rates only very gradually over the coming years,’ said Tombs.

‘It continues to look likely that CPI inflation will ease further, perhaps to as low as 1% by the end of the year. For a start, sterling's further appreciation points to a continued easing of core goods inflation over the rest of this year.

‘A combination of political pressure and recent sharp falls in wholesale prices should ensure that any rises in consumer energy bills later this year are much smaller than seen last winter. And while these downward influences on inflation will be temporary, we still believe there is considerable scope for productivity growth to pick up, keeping inflation low over the medium term.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Picton: the UK property hotspots for rental income

Picton: the UK property hotspots for rental income

Picton Property Income CEO Michael Morris reveals how he is planning to ride the ‘ripple effect’ as UK economic growth spills out from the capital across the country.

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

This week Brewin Dolphin's head of research talks to Mike Riddell, fund manager at Allianz Global Investors, about the forces driving bonds markets in a tumultuous week for markets.

Play Henderson's Hermon: how to be defensive in smaller caps

Henderson's Hermon: how to be defensive in smaller caps

Hermon, who manages the Henderson Smaller Companies trust, talks about he will tackle a 'challenging' 2016.

Your Business: Cover Star Club

Profile: 'what we are doing at Mosaic is Darwinian'

Profile: 'what we are doing at Mosaic is Darwinian'

The changes in financial services over the last few years may leave some destitute warns Marco Sambucci of Mosaic Money Management

Wealth Manager on Twitter