UK CPI Shows Some Weakness Again

Alan Penny

13 November 2019

3 min read

Row of UK flags

  • UK CPI misses slightly
  • Core CPI as expected
  • PPI Input weaker than expected
  • PPI Output weaker than anticipated

The UK released several figures on Wednesday to give traders an idea as to how the underlying economy is going. With the market paying so much attention to Brexit right now, these negative numbers certainly don’t inspire confidence.

As a result, it shows just how far the Bank of England is from being able to raise rates. Additionally, as there were a couple of dissenters last time that suggested cuts were needed, these numbers certainly won’t help the situation.

The release

The Consumer Price Index measures inflation in a basket of common goods that the average person in the United Kingdom may buy. It is looked at as a major influence on how a central bank measures inflation.

With CPI coming out at 1.5% as opposed to the expected 1.6%, perhaps inflation just isn’t showing up in the United Kingdom. If that is the case, then the market should expect to further see that the Bank of England is even more removed from being able to raise interest rates than once thought.

The fact that the numbers have missed again will put even more downward pressure on the British pound. On the other hand, it could lift UK markets up if it is seen that the Bank of England may try to do something to loosen monetary policy.

less is going into the manufacturing economy than anticipated, which is crucial to the economy

Producers Price Index figures were released in both the input and output versions, with the output coming in at -0.1% as opposed to flat, and the input version coming in at -1.3%, as opposed to the expected -1.1% for the month. This shows that less is going into the manufacturing economy than anticipated, which is crucial to the economy.


Brexit is, of course, the main attraction here. The headlines coming out of Brexit and the possibility of getting some type of resolution to that situation will be crucial for markets going forward. Therefore, the usual effect of the CPI figures may be dampened a bit.

That being said, it should not be ignored. It gives us a “look under the covers” when it comes to how the UK economy is doing.

It isn’t exactly falling off of a cliff, but growth seems to be somewhat elusive. For what it’s worth, it should be noted that Core CPI came in at 1.7% as expected.

UK economy going forward

It’s very likely that the UK’s economy will be a place value investors continue to flock to, and the signs of Armageddon just aren’t there.

There has been a lot of scaremongering, but the European Union has a lot of its own issues anyway, so being tied to it may not be a place of strength for the British in the long run. That being said, it still is a very dicey proposition in the UK for the short term.

Written By
Alan Penny

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