FXStreet (Guatemala) – Analysts at Nomura explained that UK inflation began its trend rise in November, with the CPI rate returning to positive territory and the RPI rate beating expectations.
Key Quotes:
“Renewed oil price falls are delivering a new disinflationary shock, but a 20% move now has less effect on corporate costs and thus prices because oil accounts for a smaller share of overall input costs.”
“The CPI is still weighted as though oil was near $100, but the weighting update in January should reduce fuel’s share and so inflation’s elasticity to it.”
“At low levels, the balance of potential oil price shocks shifts higher, while the passing of past shocks makes it harder for inflation to go as low. This could aid a hawkish turn, but the latest disinflationary shock is a poor motivator.”
(Market News Provided by FXstreet)