UK CPI Inflation Falls To 3.9%, Hits 28-Month Low

December 20, 2023 23:03

UK headline inflation fell to 3.9% on an annualised basis, the lowest reading recorded since September 2021. The figure surprised market analysts who had expected inflation to come in at 4.4%. The UK’s chancellor, Jeremy Hunt, said that the implementation of the government’s economic measures was “starting to remove inflationary pressures from the economy.”

The UK pound fell by 0.6% against the US dollar on Wednesday morning as lower than anticipated inflation readings could force the Bank of England (BoE) to relax its monetary policy sooner than expected. However, economists speaking to The Guardian reporters noted that core inflation came in at 5.1%, remaining above the BoE’s 2% target.

In other news, the People’s Bank of China (PBoC) kept borrowing costs unchanged as it was expected. In New Zealand, the Reserve Bank of New Zealand (RBNZ) Governor said that the governing board remains wary of inflationary pressures, adding that the next monetary policy decision would have to be based on a wide range of economic data, making it a complex task.

US GDP Q3 2023 

The US Bureau of Economic Analysis (BEA) will publish data regarding the country’s GDP for the third quarter of the year. Economists expect the report to show that the US economy expanded by 5.2% on an annualised basis, matching the previous quarter figure, and by 2.3% on a quarterly basis.

The Congressional Budget Office (CBO) projects U.S. economic growth to slow to 1.5% in 2024, with the country’s unemployment rate seen rising to 4.4% next year. The same survey suggests that the GDP growth for 2023 would reach 2.5%, significantly larger than the 0.9% figure forecast in July.

UK GDP Q3 2023

On Friday, economists will have the opportunity to scrutinise the Office for National Statistics (ONS) report regarding the UK’s GDP growth in the third quarter of 2023. Analysts suggest that the country’s economy expanded by 0.6% on an annualised basis but remained flat on a quarterly basis.

According to an ONS report published a week ago, GDP fell by 0.3% in October, surprising economists. Some analysts suggested that the economic growth rate could hover around 0% in the fourth quarter of this year. The BoE has warned that the UK could fall into recession in 2024.

UK Retail Sales November 2023

The ONS is expected to publish the UK’s retail sales data for the month of November on Friday. Economists forecast that retail sales increased by 0.4% on a monthly basis while they retreated by 1.3% on an annualised basis, regaining some ground after October’s plunge. The UK economy seems to be feeling the impact of the BoE’s strict monetary policy that tries to tame inflationary pressures.

According to the latest report by the KPMG/RetailNext Retail Think Tank (RTT), falling consumer demand combined with rising costs is set to create a challenging six months ahead for the retail sector. KPMG market experts said that “despite Black Friday sales going deeper and lasting longer than last year, indicators so far are that Christmas trading this year has been one of the worst since the pandemic hit, and although there is still all to play for in the final weeks of December, it is looking as if it’s too late turn fortunes around.”

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.