Uk Cpi Drops In September

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Uk Cpi Drops In September

UK Cpi Drops To 1.7% Y/Y During September

The markets were forecasting the UK CPI for September to be around 1.9% y/y. However, the UK CPI for September was only 1.7%, lower than the forecast.

August's reading of UK CPI was around 2.2%, which shows that the September reading has officially dipped below the 2% target. The data was released by the ONS and shows that the inflationary pressure has officially hit a multi-year low.

Uk Inflation Dips Below 2.0%

The Bank of England had set a target of 2.0% for inflation, and the recent reading has just touched 1.7%. Now, there's no reason for the BoE to keep the interest rates at such elevated levels.

In fact, any more decline in inflation will not be healthy for the UK economy and will actually have a serious impact. Higher rates have already affected consumer demand, which has led to a slowdown in the UK economy.

In September, the Core CPI reading was 3.2% y/y against the August's reading of 3.6% y/y. Once again, this was below the market forecast of 3.4%.

So, even if we don't include the prices of energy and food items in the inflation calculations, the data still shows a consistent deflation trend.

As for the services CPI in September, it also declined from 5.6% to around 4.9% y/y during September. Once again, this has dipped below 5%, which is a big moment for the BoE.

Also, the UK Consumer Price Index shows a remain of 0% m/m during September. In August, the index has rebounded to around 0.3%.

After the release of the UK CPI data, the Pound Sterling experienced intense selling pressure and has pushed it back below 1.3000. Right now, GBP/USD is trading around 1.3015 with a -0.40% loss for the day.

But, why a lower inflation print is having a negative effect on the GBP? Because it will lead to more rate cuts by the Bank of England.

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