Published: Wed, February 15, 2017
Sci-tech | By Jose Becker

German Inflation Accelerates As Estimated In January

German Inflation Accelerates As Estimated In January

China's producer prices increased the most since 2011, with the world's biggest exporter further lifting the outlook for global inflation.

Inflation in the United Kingdom in January rose at the fastest rate since June 2014 on the back of higher oil prices resulting from the OPEC-non-OPEC agreement to cut output.

Responding to news of another rise in inflation, a spokesman for the Treasury said: "Employment has reached record levels and earnings have risen faster than inflation for more than two years".

However, even if headline inflation missed forecasts this time, the data still confirm that consumer prices are rising rapidly in the U.K. At 1.8% last month, inflation is now at the highest level since June 2014 and firmly above the 0.3% printed in January past year.

The Bank of England forecast earlier this month that inflation will rise above 2.7 percent in around a year's time as Britain's vote to leave the European Union pushes up the cost of imports. ONS reports in a separate set of figures today that imported fuel and materials prices have risen by 20.5% on an annualised basis, based on last month's figures. The pound's sharp fall since the Brexit vote has made imports to the United Kingdom more expensive and oil prices have been rising on the back of lower production. Overall, Consumer Food Price Index was down at 0.53 per cent in January as against 1.37 per cent in December.

The rise in WPI is in contrast to the fall in retail inflation to a five-year low of 3.17 per cent in January.

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"The upside for United Kingdom inflation in January may have been limited by a number of retailers engaging in aggressive discounting in the January sales after disappointing sales at the end of the year, " he said.

"Wholesale inflation has gone up and this is due to the firming up of oil prices and select commodities such as basic metal alloys that are mirroring the global trends", Pankaj Patel, President, FICCI said.

'The pound weakened as investors took the view that the Bank of England's monetary policy committee will continue to take an unhurried approach to raising headline interest rates, ' said Russ Mould, investment director at fund supermarket AJ Bell.

Until recently shoppers have benefited from falling food prices and a supermarket price war but this is rapidly unwinding thanks to factors such as blighted Spanish harvests pushing up the cost of courgettes and turning Iceberg lettuces into a rare treat. The WPI for January'17 is significantly higher than the WPI of (-) 1.07% for the corresponding month a year ago.

With U.S. producers continuing to increase output, however, this evidence is unlikely to emerge in the coming months.

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