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.


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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.