UK disinflation FINALLY underway
I watched the cable (GBP/USD) markets with bated breath this morning.
After so many bad inflation prints in a row, I could barely bring myself to look at the UK consumer price figures figures...the coming UK recession was seemingly threatening to leave a smouldering crater where consumers used to be.
Maybe that will still happen, but at least the news was considerably more positive today.
As it turned out, for the first time in seemingly an age, the inflation news surprised to the downside.
UK inflation was expected by financial markets to fall from 8.7 per cent to 8.2 per cent in June, but in the event the release wasn't as bad as feared, and annual inflation fell to 7.9 per cent.
Over the month, inflation was only 0.1 per cent, and the core figures were also lower than expected.
The reason I though this merited a blog post in its own right is that, while many developed countries have clearly struck back hard in the battle against inflation - such as the US (down to 2.97 per cent) and Canada (down to 2.8 per cent) - the UK was being cited as an alarming outlier.
Of course, 7.9 per cent is still miles over the 2 per cent target, but it's the direction of travel which is important here, especially after so many upside surprises.
UK producer prices also fell -0.3 per cent over the month, following a -0.6 per cent decline in the preceding period, portending further disinflation ahead.
Antipodes news
The sigh of relief was even audible Down Under, with bonds rallying a bit further.
New Zealand's inflation figures were reported for the June quarter today, with annual inflation falling from 6.7 per cent to 6 per cent.
In other Aussie news, job advertisements fell a further -2 per cent (or -5,600) jobs in June, according to the skilled vacancies from Jobs & Skills Australia.
Source: Jobs & Skills Australia
The high watermark for the cycle was 303,450 job advertisements, so the market is gradually normalising.
SEEK has also recorded declines in advertisements over 12 of the past 13 months, with the -2.3 per cent decline in June taking total advertisements to -22.1pc from the peak.
Source: SEEK
The labour force figures are due out tomorrow, with the median market forecast expecting a modest increase in employment, holding the unemployment rate steady at 3.6 per cent.
