High UK inflation piles on pressure to hike rates

High UK inflation piles on pressure to hike rates

Consumer durables output growth slowed to 0.9 percent in December 2017, as compared with a 2.9 percent jump in November, while consumer non-durables shot up 16.5 percent in December as compared with a growth of 3.3 percent a year ago. Over the last 12 months, "headline" inflation rose 2.1%.

Inflation has been scaring the markets, and investors have been bracing for a CPI report Wednesday that could send interest rates flying and stocks diving.

However, the CBOE Volatility index, which measures near-term volatility in the stock market, initially spiked after the data.

The BLS noted that the rise in inflation was "broad-based, with increases in the indexes for gasoline, shelter, apparel, medical care, and food all contributing".

At the pumps, petrol prices rose by 1.1p per litre on the month to 121p per litre, while diesel rose 1p to 124.5p per litre.

Excluding the volatile food and energy components, the CPI shot up 0.3 percent.

A 30 basis points (bps) fall in food inflation, aided by a 0.6 per cent decline in fuel inflation, brought overall CPI inflation lower, said Crisil.

Swansea beats Burnley to maintain revival under Carvalhal
Carlos Carvalhal has transformed the Swans' fortunes since taking over from Paul Clement, and the Welsh side are now two points outside the relegation zone.

Interestingly, while Morgan Stanley sees improvement in both inflation and trade deficit numbers in January, it has flagged concern that "moderate risks to macro stability are emerging on account of the wider-than-targeted fiscal deficits". Are we stabilizing, or heading up?

The fear is that the combination of an improving economy, coupled with stimulus from tax cuts and government spending, will push inflation - and interest rates - up too far, too fast. A couple of increases in interest rates this year, at least, may kick off in the spring.

Food inflation in Janua-ry fell to 4.7 per cent, from 4.96 per cent in December. That broke a three-month string of flat or negative non-seasonally adjusted inflation.

Over in the USA, the equity indices kicked of the session on the back foot with the Dow opening 170 points lower and the S&P slipping 0.5%. Here are the new March 2018 inflation indexes for all TIPS.

Following in the footsteps of the United States Federal Reserve and the Bank of Canada, the Bank of England now looks set to join the "hikers". Lots to think about. Without apparel, the core reading would have been just 2.4% rather than 3%.

In Stewart Mackertich's views, although RBI has given a hawkish outlook in inflation and indicates a higher rate scenario, we believe correction in crude oil prices and stability of the INR may not lead to high inflation. The Bank's Governor, Mark Carney, confirmed after the release of the quarterly Inflation Report last week that increases in interest rates were likely earlier and faster than previously expected.

Across the board, stock futures dropped instantly after news broke Wednesday. I am not receiving compensation for it (other than from Seeking Alpha).

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