Here in the UK the main factors in the fall in CPI were a large fall in the price of air transport between February and March this year, showing a fall of 14.2%. This is set against a rise of 4.5% seen in these prices in the same period last year. The cost of clothing and footwear also fell as retailers dropped prices to boost sales following April’s cold weather. If the costs of food, energy, tobacco and alcohol are stripped out of the calculation, the so-called core inflation rate, fell to 1.2%. The consensus of economic analysist forecast for this, was for a figure of 1.4%. Following this trend, the wider Retail Prices Index (RPI), a barometer measure still used for some future rent and pension calculations, also fell to 1.2%, again below the economists anticipated forecast of 1.4%. These falls in inflation, to below the Bank of England’s target level of 2%, required the Governor, Mark Carney, to write his sixth letter to the Chancellor of the Exchequer, George Osborne, to explain the reasons. In this he said: “The underlying causes of the below-target in ation of the past year and a half have been: sharp falls in commodity prices, the past appreciation of sterling, and to a lesser degree the subdued pace of domestic cost growth.” Markets – May
(Data supplied by The Outsourced Marketing Department) Global equity markets – with the exception of the FTSE100 – continued their three-month recovery. Having itself recorded three months of gains from January, the FTSE100 drifted on the last day of the month by 40 points to close down marginally 0.18% at 6,230.8. This late dip was attributed to ‘Brexit’ fears as polls indicated the leave campaign taking a small lead for the first time. The FTSE250, however, rose by 2.28% to end May at 17,184.7, whilst the junior AIM market also gained 1.62% to 739.5. Across the pond the Dow Jones marked time, rising a nominal 0.08% to 17,787.2 as market watchers analysed the latest missives from The Federal Reserve regarding the direction and timing of any interest rate rise. The technology based Nasdaq closed the month at 4,948.05 to show a rise of 3.62%. On the continent the Eurostoxx50 also recorded its third month of improvement, lifting 1.16% to 3,063.48, again with all eyes here on the UK’s ‘Brexit’ referendum campaigns. The Japanese market saw the Nikkei225 recover strongly, ending May at 17,234.98 for a rise of 3.41%. The currency markets were sanguine in May with Sterling slipping 0.68% against the US Dollar to $1.45, but up 1.56% against the Euro at €1.30. The Euro also weakened by 2.63% against the greenback to $1.11. The price of oil (Brent Crude) continued to improve as the lack of a decisive production quota policy from OPEC, terrorist action in Nigeria and Canadian bush fires dampened global output somewhat. At $49.89 a barrel ‘black gold’ rose 5.28% in the month and now sits up 41.9% over the last three months.
Gold meanwhile lost its sparkle, dipping 4.04% in May to $1,214.98 a Troy ounce. Download full report here