Inflation shows up in one of the few places it’s not wanted – housing

17th November 2015 By: Ranko Berich

UK CPI – 17/11/15

This morning’s CPI data added little new information to the UK macro picture. However, inflation did show up in one of the few places it wasn’t wanted – the housing market.

The main takeaway from today’s data is that inflation remains very low in the UK. Transport and food and beverages continue to be the main drags on the index, but even excluding energy, food, alcohol and tobacco, inflation rose just 1.1 per cent year-on-year.

While reactions in the UK may be muted, this is exactly the same level as the eurozone, where the ECB’s warning lights are flashing and further monetary easing appears to be in the works. The UK still has a far stronger economy than the eurozone, with a healthy labour market that is delivering accelerating wage improvement. This should eventually contribute to an improvement in inflation, but it seems the Bank of England will have to wait a little longer to see this reflected in the data.