UK CPI - Expectations lower and correct

CPI and RPI figures came out of the UK this morning December 13th 2011. These are the numbers which tell us about inflation in the UK, which has been well above target for sometime. Normally the Central Bank will raise interest rates when inflation is too high, but the Bank of England or the BOE has not down this because growth is very slow and they fear if they hike rates this will kill what little growth there is and the UK will go into a recession.

They have justified this by producing forecasts which predict that CPI will fall over the next year or two, so the consumers who are facing higher prices but lower wages and higher taxes must weather this storm...whether there is enough social cohesion for this is a question especially after the August riots. Here are the figures:

CPI Headline m/m : Median Estimate +0.2% Average Estimate +0.1% Prior +0.1%
Range of Estimates -0.1% to +0.3% Actual +0.2%
CPI Headline y/y : Median Estimate +4.8% Average Estimate +4.8% Prior +5.0%
Range of Estimates +4.6% to +5.0% Actual +4.8%
CPI Core y/y : Median Estimate +3.3% Average Estimate +3.3% Prior +3.4%
Range of Estimates +3.1% to +3.4% Actual +3.2%
RPI Headline m/m : Median Estimate +0.2% Average Estimate +0.2% Prior +0.0%
Range of Estimates 0.0% to +0.4% Actual +0.2%
RPI Headline y/y : Median Estimate +5.1% Average Estimate +5.1% Prior +5.4%
Range of Estimates +5.0% to +5.4% Actual +5.2%
RPI ex Mort Int. Payments y/y : Median Estimate +5.3% Average Estimate +5.3% Prior +5.6%
Range of Estimates +5.1% to +5.6 Actual +5.6%

So pretty much lower as predicted, let's hope they continue to be correct and we see inflation
come down lower and people have more to spend. Cable or GBPUSD did rally 25-30 pips despite no deviation:

BOE's Dale had made some comments going into the release, here is a link to what he said, which was basically CPI was to fall and the BOE had room to increase QE (called the Asset Purchase Facility in the UK or APF)...CLick Here for more details. You can see that the Pound did fall before the news, but this could have been to selling of the Euro and DAX rather than Dales comments, which came 15 minute before the CPI release, where as the main thrust of the drop was 40 minutes before the release...see this chart: