Sterling falls as UK narrowly misses deflation

The U.K. has narrowly missed slipping into deflation territory, according to official data Tuesday.

Consumer price inflation in the U.K. was steady at 0 percent in March from a year earlier, in line with expectations from analysts polled by Reuters.

Sterling fell to a session low of $1.4618 after the data was released.

The fall in consumer price growth has been attributed to the lower cost of oil and food imports.

There are some concerns that slowing inflation could translate into falling prices, with shoppers withholding purchases in the hope of further price falls, among other factors that could cause a deflationary spiral. The latest data showing steady rather than falling prices could help dispel those fears.

CNBC

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam