Britain Economy Is Stable Regardless Of Brexit Uncertainties, ONS reported

  • May 22, 2019 BST
  • Team Kalkine
Britain Economy Is Stable Regardless Of Brexit Uncertainties, ONS reported

Latest consumer price inflation data revealed by the Office for National Statistics recorded that CPI rose with an annual rate of 2.1 per cent in April 2019, as compared with the 1.9 per cent in March 2019. The index was primarily influenced by rising energy prices and airfares during the April, driven by Easter holidays and the least contribution came from the range of recreational and cultural items, which comprises computer games and package holidays.

However, the surge was marginally below the consensus estimate of 2.2 per cent, but slightly above the Bank of England’s 2.0 per cent target in April. However, some economists predict that this surge is enough for BOE to consider a hike in the interest rates.

During the first month of the financial year 2020 (April’19), public borrowings were at par with the corresponding period at £5.8bn.

The latest data painted a picture of stable UK economy, with modest growth, inflation is under control, and at the same time the employment rate is at a lifetime high, and unemployment is at multi-decade lows.

One British economist stated that "while we assume that Consumer Price Index (CPI) is likely to quote above the BOE's target 2.0 per cent for the rest of the year, but I don't think this is going bring Bank of England into action anytime sooner."

He added that “energy and gas prices surged between March and April 2019, as the utility companies responded to a 10 per cent hike in Ofgem's energy price limit.”

Core Inflation (excluding energy, food and alcohol), decreased marginally to 1.8 per cent against 1.9 per cent in March 2019. This reveals that the strong wage market is so far having a negligible effect on the underlying price pressures.

During 2017 and 2018, inflation rose above the threshold limit of 2.0 per cent was mainly influenced by the devaluation in the sterling pound value against the major currencies, which raised import bill in the wake of the Brexit vote. However, that story is now ended, and in April 2019, inflation surged on account of rising energy and gas prices, which indicated that surge in the wholesale price of electricity and gas had been passed on to the retail customers.

However, since last few days, sterling has been falling against the US Dollar and registered a new low on a year-to-date basis, on Wednesday of $1.2672. This indicates that Brexit related uncertainties are again escalating, and pound could fall substantially further from the current levels.

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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