Inflation in March remained unchanged from February in U.K, as rising food and energy prices remain a threat for the BOE to achieve their desired target for inflation at 2.0%, presenting challenges as the central bank struggles to avoid the first recession since early 1990s!
Prices on the consumer level rose 0.4 percent in March after rising 0.7% the prior month and below median estimates of 0.6% rise, while compared with a year earlier inflation rose 2.5% unchanged from the prior estimate also below median estimates, while core CPI rose 1.2% inline with the previous reading.
Retail price index also fell in March yet reflecting dropping house prices and lower interest rates charged by banks on payments, RPI rose 0.3% on the month down from 0.8% back in February, while compared with a year earlier RPI rose 3.8% also down from the previous 4.1% and below the 3.9% forecasted by median estimates.
While a survey in Germany showed that future expectations were very low in April according to the ZEW Survey, the Economic sentiment fell to -40.7 from the previous -32.0, while the Current situation sentiment rose to 33.2 from 32.1, as for the Euro Zone the ZEW Survey signaled deteriorating expectations over the future of the 15-nation economy as the Economic sentiment also fell -44.8 from -35.0.
The BOE were very clear when they admitted they expect a 'sharp slowdown' in economic activity during this year after they decided to cut their rates by another quarter percentage point to 5.00 percent, while their inflation expectations remained elevated as the bank expects inflation to rise above 3.0 percent, which requires the BOE Chairman Mr. King to write a letter of explanation for the Government!
While the falling expectations over the future of the Euro area remains the notable thing even as the 15-nation economy remained resilient to a recession in the world's largest economy the United States, and a settling above the $1.50 mark Euro but luckily for the ECB their economic fundamentals are still 'sound', though highlighted by 'an unusual amount of uncertainty' over the extent of damage that occurred to the economy!
Later in the day the U.S Commerce Department will release the producer price index for March, as expectations are for a sharp rise in prices due to the never ending rise in energy and raw material's prices!
Struggling central banks around the globe should be the defining characteristic for this era as they are divided into two groups, one group remained focused on deteriorating growth levels led by the Feds and the BOE, and the other group are focused on inflation led b y the ECB and the BOJ!