UK inflation remains at zero

The hubbub surrounding a potential negative turn in UK inflation proved largely unfounded, as the figure came in at 0.0% for the second month in a row.

However, that doesn’t tell the whole story. In fact, inflation did turn negative, by 0.01% for March, a figure the ONS generously rounded up to zero for the official figure. This means that yes, the UK isn’t seeing deflation, but similarly that it is still seeing the weakest figures in this area since the 1960s. Unsurprisingly cheaper food and oil are the reasons for current wage-damaging stagnation/monetary easing on the public’s pockets, deleting as applicable dependent on which political party you are supporting.

Yet core inflation, the figure that strips away food and oil, fell to 1.0%, its lowest point since July 2006, and a worrying indictor of the health of UK inflation when it isn’t being obscured by the unique situations in regards the oil and food sectors; this is a slightly different picture than the one the Tories would like to paint, one that can’t be explained away with platitudes about cheaper prices for the public. Following this set of data, the FTSE lingered near its highs, despite an incredibly flat morning that saw only a few points in gains as the day continued; the pound on the other hand continued to suffer under election uncertainty and core inflation woes, as it lost more ground against the dollar.

After the morning’s focus was on UK inflation, this afternoon will be dominated by the US markets. Earnings season ‘officially’ gets underway this Tuesday, with JP Morgan and Wells Fargo among the US business monoliths announcing their first quarter results later today; like last season, the dollar is dominating the discussion, with fears that its strength could once again damage the profits of America’s many multinationals. Elsewhere, the latest retail sales and PPI figures should provide the Dow Jones with more interest rate-relevant data to chew on, something investors apparently aren’t looking forward to as the US futures spent the morning sliding into marginal losses.

Finally, a quiet morning for the Eurozone led to a widening of its losses, despite the latest region wide industrial production figure coming in much higher than expected. The fact that Greece had to deny this morning that it is preparing to default it if a day cannot be reached by April 24th didn’t help set a positive tone after the bell, and investors seem to be preoccupied with this looming fiscal detangling as Tuesday continues.