The UK rate of inflation (y/y) has been slowing down for 5 months in a row. The retail sales index gained 1.2% in Feb against +1.4% in Jan. The core index (excluding foodstuffs) declined for the first time since Nov 2009.
The major reason for the slowdown is the prolonged period of discounts in the UK.
In the meantime, short-term inflation risks still hold true. Higher oil prices may cause another wave of consumer price hikes. However, it should be noted that the overall rate of inflation keeps declining. Therefore, British households are expected to feel less inflation pressure in the near future.
Foodstuffs and public utilities account for the major part of British households’ spending. However, many retail products are much cheaper than a year ago.
According to the Futures Trading Department of , the GBP futures contract is currently recovering against yesterday’s downtrend. The price suspended the downswing around 1.5700. After that the sellers left the market. However, major buyers are also absent at the moment. If the price consolidates above 1,5750, it will rally up to 1.5800.
