(menafn – ecpulse) United Kingdoms inflation halted its rise in August to help the BOE to adopt its recent forward guidance which is linked to an unemployment threshold of 7%.
Data released on Tuesday showed that CPI for the year ended August dropped to 2.7%, the least in three months, from 2.8% in July, in line with median forecast, buoyed by the slowdown in transport costs and prices for new clothing from a year earlier.
On the monthly basis, the reading soared to 0.4% from the prior flat reading of 0.0%.
Annual Core CPI, which excludes alcohol, food, tobacco and energy prices, lingered at 2.0%.
The BoE’s inflation report released last month showed Inflation is believed to reach target in the fourth quarter of 2015, where it is likely to fall to goal a little after 2-year horizon.
The BoE predicts the rate to stay around 2.9% in the near term, where guidance would not hold if CPI expectations not anchored.
“CPI inflation 18 to 24 months ahead is more likely than not to be below 2.5%, and medium-term inflation expectations remain sufficiently well anchored,” Carney said last month.
BOE minutes for August 1 monetary decision showed a unanimous vote to holding both interest rate and amount of asset purchases, while MPC member Martin preferred a tougher stance on above-target inflation.
Weale recorded his opposition to the time frame the BOE set for inflation to stop linking guidance to unemployment.
Tomorrow, eyes will focus on BOE minutes for September’s monetary decision which also signaled a hold in the bank’s monetary stance.
Other inflation gauges showed that Retail Price Index (RPI) edged up to 3.3% on the annual basis from 3.1% while rose to 0.5% from 0.0% on the month.
Annual PPI output retreated to 1.6% from a previous of 2.1% while the yearly input gauge dropped to 2.8% from a revised of 5.1%.
By taking a look at crude oil prices, it is clear that it resumed its rally for a third straight month in August to hit a high of 112.21 a barrel from the month’s opening of 105.27.
The GBP/USD is currently trading around 1.5900 after hitting a high of 1.5934.
Carney has reiterated his pledge to keep interest rates at record low levels until the unemployment threshold of 7 percent is reached, where he referred that is only a 1/3 chance of unemployment coming down by mid-2015.