UK inflation rate rises to 0.1% in November

BBC:

The UK’s inflation rate as measured by the Consumer Prices Index rose to 0.1% in November, the Office for National Statistics has said.

That compares with a rate of -0.1% a month earlier. Analysts had expected a figure of about zero.

Transport costs, alcohol and tobacco prices were the main contributors to the rise in the rate, said the ONS.

However, this was partially offset by a fall in clothing prices, the ONS added.

Last week, UK interest rates were left unchanged again at 0.5% by the Bank of England’s rate-setters.

The nine policymakers on the Monetary Policy Committee voted 8-1 for no change, with the Bank predicting that inflation will stay below 1% until the second half of next year.

inflation graph

Inflation as measured by the Retail Prices Index (RPI) was 1.1%, up from 0.7% in October.

RPI includes housing costs such as mortgage interest payments and council tax, whereas CPI does not.

“UK inflation remained largely absent in November, and looks set to remain weaker for longer than forecasters have recently been expecting,” said Chris Williamson. chief economist at data firm Markit.

“Falling prices for oil and other commodities are helping drive down companies’ costs.

“Weak wage pressures and fierce competition in the retail sector are also helping keep a lid on prices. Hence clothing prices showing a record fall between October and November.”

Ben Brettell, senior economist at broker Hargreaves Lansdown, said that while core inflation – which strips out volatile components such as food and energy – had risen slightly, it “remained weak at 1.2%”.

“This offers little suggestion that underlying inflationary pressures are building in the UK economy. Furthermore there are signs that wage growth is flattening out – figures due out tomorrow are expected to show pay growth has slowed from 3.0% to 2.5%.”

Original article:

www.bbc.co.uk