Britain's annual rate of consumer price inflation fell below zero for the first time in more than half a century, figures showed on Tuesday, though Bank of England Governor Mark Carney said the dip was likely to be brief. British finance minister George Osborne also said the drop did not amount to "damaging deflation", referring to a spiral of falling prices that hurt the economy.
The Office for National Statistics said consumer prices fell 0.1 percent in April compared with the same month last year. Economists had expected the consumer price index to remain unchanged.
It was the first time annual CPI had fallen since official records began in 1996. Based on comparable estimates going back further, it was the first time that consumer prices had declined since 1960, the ONS said.
Carney was keen to stress that the decline was caused by last year's big one-off fall in energy prices and not weak domestic demand. He also went on to add that Britons should enjoy the reduction in their cost of living before inflation picked up.
"We expect inflation to be very low over the next few months. But over the course of the year, as we get towards the end, inflation should start to pick up towards our 2 percent target," Carney told broadcasters.
An underlying measure of inflation, which strips out increases in energy, food, alcohol and tobacco, rose by 0.8 percent in April, which was its slowest rate since March 2001.
German investor confidence fell more than analysts forecast after growth in Europe’s largest economy slowed at the start of the year. The ZEW Centre for European Economic Research said its index of investor and analyst expectations fell to 41.9 in May from 53.3 in April. That’s the lowest level since December. Economists had forecast a decline to 49.
Growth in Germany slowed more than economists forecast in the first quarter, even as the euro area, its largest trading partner, expanded at the fastest pace in almost two years. While the Bundesbank predicts momentum in German manufacturing will be sluggish in the months ahead, it sees consumer spending supporting the economic recovery.
German gross domestic product rose 0.3 percent in the three months through March, less than in neighbouring countries such as France or Spain and the 19-nation euro area, which expanded 0.4 percent in the period.
New residential construction in the U.S. surged in April to the highest level in more than seven years, indicating the industry has moved beyond a weather-related soft patch to regain strength.
Housing starts jumped 20.2 percent to a 1.14 million annualized rate, the most since November 2007. The median forecast was 1.02 million. More permits, a proxy for future construction, were issued than at any time since June 2008.
An improving labour market and mortgage costs close to multiyear lows are reviving residential construction, a sign that the weakness in early 2015 was probably due to harsh winter weather.
9:30 - GBP - MPC Official Bank Rate Votes 0-0-9
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