In our macroeconomic calendar, the data announced in the UK has an importance place. The Consumer Price Index (CPI) rose by 0.4% in February, slightly above market expectations of 0.3% compared to the previous month, and it also increased 1.7% in line with expectations compared to the same month last year, according to data released by the UK Office for National Statistics (ONS). In addition, the consumer price index rose by 0.6 percent, exceeding market expectations of 0.4% on monthly basis. On annual basis, it is up by 1.7% above expectations of 1.5%.
According to the ONS data set, alcohol and tobacco and housing and household services were the groups with the most declines, by 0.03%, while restaurants and hotels was the group with the most increases -0.04%.
Based on the change in CPI, which is the most important indicator followed by the markets in the data set, it is seen that although the data, which has been modestly accelerating as of July, rose to 1.8% in January 2020, this rise is not permanent. In addition, we can say that the CPI, which was minus 0.2% on a monthly basis in January, moved to the positive side in February and reached 0.4% , the highest level in the last 5 months. This was the decisive factor in this period. On the other hand, despite the strong fall in commodity prices, particularly oil products, and the negative impact of coronavirus on household spending in February, CPI performed relatively positively during this period.
Although the emergency rate cuts of the Bank of England are important triggers for consumer spending in March, the consumer spending eased because of the coronavirus-derived restrictions and policies, and thus, we observed a sharp decline in oil prices and in transportation and energy, as a result. These effects might also be seen in future and have a disinflationary pressures on consumer prices.
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