UK Inflation Hits Two And A Half Years Low But Misses Expectations

Data coming from the UK showed that headline as well as core inflation fell in March but failed to match analysts’ forecasts. Some economists suggest that the higher-than expected set of figures could push back the timing of the first Bank of England (BoE) rate cut. Before the report was released, markets were pricing in a September interest rate cut.

The British pound strengthened against the US dollar by 0.3% early on Wednesday morning on the back of the inflation report.

In Europe, the European Central Bank’s (ECB) chair Christine Lagarde told CNBC reporters that the board would cut interest rates if nothing extraordinary happened, noting that “subject to no development of additional shock, it will be time to moderate restrictive monetary policy in reasonably short order.”

UK CPI March 2024 Report

According to stats published by the Office for National Statistics (ONS), headline inflation in the UK fell to 3.2% in March, on a year-to-year basis. The figure was slightly higher than the 3.1% reading anticipated by market analysts. Core inflation also was higher than expected, coming in at 4.2%.

Commenting on UK inflation figures, KPMG economists noted that “the overall outlook for inflation remains broadly positive, however there are several risks which could cause a setback. Today’s data are unlikely to move the needle for the Bank of England. We expect inflation to return to target later this spring, which raises the prospect of interest rate cuts from June onwards.”

IMF: Global Economy Proves ‘Surprisingly Resilient’

A report by the International Monetary Fund (IMF) suggested that the world economy has proven resilient, exceeding expectations, despite the harsh economic conditions such as high interest rates, elevated inflation and geopolitical tensions. IMF’s analysts now expect global growth to reach 3.2% in 2024, up by 0.1% when compared to January’s forecast.

The IMF’s chief economist, Pierre-Olivier Gourinchas, said that the economy is heading for a so called “soft landing,” noting that “despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose.”

The global headline inflation forecast sees the annual average of 6.8% in 2023 falling to 5.9% in 2024 and 4.5% in 2025, suggesting that advanced economies are poised to reach their target quicker than emerging economies.

Japan National CPI March 2024 Report

In Japan, the consensus among economists for the National core CPI, on a year-to-year basis, is to drop from 2.8% to 2.7% and core inflation to drop to 2.6% from 2.8%. As the Japanese yen has depreciated in the last few weeks and commodity prices have risen, headline inflation could rise in the weeks to come.

An ING report released on April 11th forecasts CPI inflation to remain steady at 2.8% on a yearly basis. ING’s economists noted that they remain optimistic when it comes to the economy’s cyclical recovery that is under way.

UK Retail Sales March 2024 Report

The Office for National Statistics (ONS) will publish retail sales data for the month of March on Friday. Analysts expect March retail sales in the UK to come in at 0.3% on a month-to-month basis.

The  total value of retail sales was up by 3.5% in March on an annualised basis, according to the monthly sales monitor from the British Retail Consortium and KPMG. The figures presented in the report were the best ones recorded in the last two years. KPMG analysts suggested that “as April signals big increases in the sector’s cost base – through the rise in minimum wage rates and business rate hikes for the larger high street brands – retailers will be hoping that the bounce back of March sales is more than just an Easter blip.”

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