(MENAFN– ecpulse) United Kingdom`s inflation resumed its drop below the BOE target in March to raise concerns low inflation may hamper recovery.
Data released on Tuesday showed that CPI for the year ended February retreated to 1.7%, the lowest since September 2009, from 1.9% in January, in line with analysts’ forecast.
On the monthly basis, the reading rose 0.5% from the prior reading of 0.6% fall.
Annual Core CPI, which excludes alcohol, food, tobacco and energy prices, came in at 1.7% from the previous of 1.6%.
After a long period of high inflation, price deceleration may emerge as a key challenge confronting the BOE during its recovery quest.
The minutes of BOE March’s monetary meeting stressed on the risk of the pound’s appreciation as it puts downside pressure on inflation.
“Sterling has appreciated by another 1.5 percent during this month, and it was possible that this gradual appreciations would continue if prospects in the U.K. continued to be seen as increasingly favorable relative to those of it’s main trading partners,” the minutes said.
Inflation is likely to remain above 2.5 percent in 18-24 months unless the sterling’s appreciation made that prospect a little less likely, the BOE mentioned.
BOE Governor Mark Carney illustrated there is scope to keep interest rate at its record low for a while.
The recent change in the BOE’s guidance, which linked the rise in interest rate to a broader range of economic indicators instead of a 7-percent threshold.
Crude oil rose in February to hit a peak of $103.34 a barrel from a low of $96.25.
Other inflation gauges showed that Retail Price Index (RPI) inched down to 2.7% on the annual basis from 2.8% while surged to 0.6% from 0.3% drop on the month.
Annual PPI output recorded 0.5% from a previous of 0.9% while the yearly input gauge dropped 5.7% from a prior of -2.9%.
Investors will focus on retail sales data later in the week, which may show sales excluding auto fuel and including rebounded 0.3 percent and 0.4 percent respectively last month, following January’s 1.5 percent fall.
As of 09:40 GMT, the GBP/USD set a new low of 1.6480, from the session’s high of 1.6508, while it is currently trading around 1.6483.
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