Daily Market Report - 19/11/2014

U.K. inflation was expected to fall last month due to a fall in transport prices but accelerated as the cost of toys rose in the run-up to Christmas, the rate of consumer price growth increased to 1.3 percent from 1.2 percent in September. The pick in inflation up may prove temporary as Bank of England Governor Mark Carney has warned about “disinflationary pressures” being imported from the euro area.

Separate data yesterday showed input prices at factories fell an annual 8.4 percent, with imported food dropping a record 9.1 percent. 
Some economists have stated that inflation could fall below 1% in 2015 if oil prices continue to fall and bring petrol prices down.

German investor confidence rose for the first time in 11 months. The ZEW Centre for European Economic Research said its index of investor and analyst expectations increased to 11.5 in November from minus 3.6 in October, beating economists’ forecast for a rebound to 0.5.

Germany’s economy has lagged behind other European states as a whole in third quarter. Growth was driven primarily by private consumption as equipment investment dropped, construction fell and inventories contracted. The government cut its growth forecasts last month, and the Bundesbank said yesterday that the economy will lack momentum until at least the end of this year.

Wholesale prices unexpectedly increased in October as higher costs for services and food outweighed a slump in energy. The 0.2 percent advance in the producer-price index followed a 0.1 percent drop the prior month, the October increase reflected the biggest gain in services costs since July 2013. 

Even with last month’s increase, wholesale prices over the last year were up 1.5 percent, the smallest gain since February and a sign that slowdowns in global markets are reducing demand for raw materials such as crude oil.

Key Announcements:

09:30 GBP : Bank of England Minutes
09:30 GBP : Bank of England interest rate vote count expected to be 7-2
19:00 USD : US Federal Reserve minutes discussing the state of the US Economy

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