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17 Sep 2013
UK inflation continues to outstrip wages, GBP/USD pares gains on data
FXstreet.com (London) - UK consumer price index-linked inflation figures released this morning indicates that inflation is slowing, coming in at 2.7 percent, down by one point on June’s figure.
The drop in CPI was attributed to a fall in air fares, petrol and diesel, and clothing prices.
The figures, released by the Office for National Statistics, were inline with the market consensus.
The controlled inflation numbers will be encouraging news for the new Bank of England governor, Mark Carney – indicating that there is some slack in the market, allowing him to maintain the record-low BoE base rates.
However, there is some bad news in this morning’s data for Mark Carney, with inflation continuing to outstrip wages. Weekly earnings are up only 1.1 percent year-on-year – a worrying trend that has been in place since the 2008. Despite central bank attempts to stimulate the jobs market with the help of artificially low rates, households are being squeezed by deteriorating incomes in real terms.
In a meeting with the Treasury Select Committee last week, Carney reaffirmed the Bank of England’s stance that it would not hike interest rates until UK jobless figures broke below its 7 percent threshold. Carney will be hoping that a continued strengthening of underlying UK macro conditions will help stop the rot in UK household incomes by improving wage conditions.
Sterling pared gains on the dollar on the data, with GBP/USD falling from USD1.5935 to challenge the USD1.5900 level.
The drop in CPI was attributed to a fall in air fares, petrol and diesel, and clothing prices.
The figures, released by the Office for National Statistics, were inline with the market consensus.
The controlled inflation numbers will be encouraging news for the new Bank of England governor, Mark Carney – indicating that there is some slack in the market, allowing him to maintain the record-low BoE base rates.
However, there is some bad news in this morning’s data for Mark Carney, with inflation continuing to outstrip wages. Weekly earnings are up only 1.1 percent year-on-year – a worrying trend that has been in place since the 2008. Despite central bank attempts to stimulate the jobs market with the help of artificially low rates, households are being squeezed by deteriorating incomes in real terms.
In a meeting with the Treasury Select Committee last week, Carney reaffirmed the Bank of England’s stance that it would not hike interest rates until UK jobless figures broke below its 7 percent threshold. Carney will be hoping that a continued strengthening of underlying UK macro conditions will help stop the rot in UK household incomes by improving wage conditions.
Sterling pared gains on the dollar on the data, with GBP/USD falling from USD1.5935 to challenge the USD1.5900 level.