Share Prices & Company Research

Press Release

19 December 2018

Inflation falls to 2.3% in November

The Consumer Price Index (CPI) inflation rate dropped to 2.3% in November, bringing the annual rate closer to the Bank of England (BoE)’s target rate of 2%.

James Rowbury, Investment Research Coordinator, said: “Today’s figures represent a 20-month low, as inflation hits its lowest level since March 2017. The decline was driven by falling oil prices and a significant drop in recreation & culture costs which offset rising alcohol & tobacco prices. Petrol prices fell by 2.6p per litre between October and November compared to a rise of 1.8p per litre over the same period last year.

“The Office for National Statistics said the drop in recreation and culture costs was driven by falls in concert tickets and computer games. The BoE expects inflationary pressures to persist as a strong labour market drives wage growth; weekly earnings grew by 3.3% in the year to October suggesting real incomes have grown in 2018. The BoE has suggested that they will look to raise rates three times over the next two years to cap price growth, assuming Brexit goes smoothly.

“However, today’s figures are below previous forecasts provided by the BoE, leading to some questioning that the summer rate hike may have been the wrong call, bringing any future hikes under scrutiny. The Bank of England has signalled three more rate hikes over the next 12 months, implying any tightening will be delicate going forward.”

Ends

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Inflation falls to 2.3% in November
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