U.K. CPI Declines, But Core CPI Increases Again In March

Release Explanation: The CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore give an overall read of Inflationary pressures. It is the most widely used Inflation indicator of Central Banks, Institutions, and Governments. It is used to calculate cost of living numbers for Government programs. 'Each regional central bank will have their own CPI target rate, and each will differ in line with the way they individually want to control the aspects of their own economies,' TheLFB-Forex.com Trade Team said.

Trade Desk Thoughts: The U.K. Consumer Price Index declined in March to 2.9%, from 3.2% one month earlier. However, the Core CPI, which excludes volatile items, rose for a fourth straight month to 1.7%, from 1.5% in February.

'To some extent, the CPI number does not justify the BoE's concern of undershooting the inflation target. The core CPI keeps rising at a sustainable pace, while the CPI number is much higher than in other major economies, such as the U.S, Europe and Switzerland' TheLFB-Forex.com Trade Team said.

The largest downward pressure on the CPI annual rate came from housing and household services. This was principally due to gas bills, food, non-alcoholic beverages and transport costs. The largest upward pressure on the CPI annual rate came from recreation and culture where, overall, prices rose this year but fell a year ago.

Retail Prices Index (RPI) inflation slowed to -0.4% in March, down from 0.0% in February. The main factors affecting the CPI also affected the RPI.

Forex Technical Reaction: The pound rose 30 pips after the news release. For now, the pair is struggling to break above the 1.4570 resistance area, where it peaked ahead of the London open.

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