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U.K. FIG Hints at Upturn


A leading indicator of underlying inflation in Britain edged up in January, suggesting a long period of subdued inflation may have reached its low-point, a leading research body said on Friday.

The Economic Cycle Research Institute (ECRI), a New York-based body that specialises in monitoring turning points in the business cycle, stressed, however, that it was premature to predict a definite cyclical upturn in UK inflation.

Its UK Future Inflation Gauge rose to 101.8 in January from 101.2 in December. ECRI said that changes in direction in the inflation gauge had a fairly close predictive relationship with direction changes in short term interest rates set by the Bank of England.

"A single month's uptick is not enough to draw conclusions from," said Anirvan Banerji, director of research at the ECRI. "Whether or not it is the beginning of a cyclical upturn in UK inflation, it may at least suggest that the low-point is ear."

The index has been in steady decline from a peak of 109.2 in December 1999.

Britain's underlying inflation rate has been tame in recent years coming in under the Bank of England's 2.5 percent target for 30 of the last 32 months.
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