The pound is tumbling after the latest UK inflation data

The pound is dropping on Tuesday morning after the latest set of UK inflation data missed forecasts.

UK inflation surged once again in January, coming within just 0.2 percentage points of its officially mandated target for the first time in more than two years, but at the same time, missed expectations. The headline consumer price inflation figure was 1.8% against the 1.9% forecast by economists.

As a result of the miss, sterling slipped, falling by more than 0.5% on the day to trade at 1.2454 against the dollar soon after 10.10 a.m. GMT (5.10 a.m. ET) around 40 minutes after the release.

Here is the chart:

Markets Insider

Tuesday’s inflation undershoot, according to Samuel Tombs of Pantheon Macroeconomics “entirely reflected a pull back in clothing inflation to zero, from 1.2% in December.”

“December’s rate had been boosted by an earlier than usual start to winter discounting by clothing retailers last year, so it always was unlikely to be sustained. We have little doubt that clothing and other retailers who rely on imports will push through big price increases over the coming months.”