Forex News

Britain's inflation drops to the lowest in five years

Britain inflation

The stimulus that the British government resorted to to address the negative consequences of the Corona pandemic has helped pressure prices down, which pushed inflation rates in Britain to record their lowest rates in five years during the month of August.

The annual consumer price index, which is a measure of inflation in Britain, recorded a 0.2% rise in August, the lowest increase in inflation rates since December of 2015, compared to a previous increase of 1%, and expectations indicated 0.1%, while the annual core index rose by  0.9%, from 1.8% and expectations of 0.7%.

On the monthly level, the CPI decreased by 0.4% from a previous increase of 0.4%, and expectations were for a decrease of 0.6%.

The British government supported discounts on more than 100 million meals last month through the government's "Eat Out to Help Out" program, which offered diners a state-funded price cut of up to £ 10 ($ 12.89).

Despite the significant impact of this move by the government on inflation rates and pushing prices down, the impact of the Coronavirus pandemic on the economy and the upcoming rise in unemployment is likely to keep consumer prices under control.

Prices in restaurants and cafes decreased 2.6% compared to August of last year, their first drop since registration began in 1989.

With the end of the government support program, prices may rise again, along with the rate of inflation, but all expectations indicate that inflation will remain below the bank’s target for a longer period of time, especially as the consumer price index has stabilized below the bank’s target for 13 months in a row.

The euro is still maintaining its somewhat high levels against the US dollar, since the beginning of September has been limited to trading near the highest level of the euro since May of 2018, due to the weak dollar and conflicting expectations in the markets.

The euro versus dollar pair traded after the release of the data at the level of 1.1874, after the session opened today at 1.1841, recording the highest at 1.1881.

Share Article