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13 February 2019

No sign of rate rise as inflation dips below 2%

UK inflation fell to a two-year low last month, dipping below the Bank of England’s target rate for the first time since January 2017.

James Rowbury, Investment Research Coordinator, said: “The consumer price index was reported this morning to have fallen to 1.8% for January 2019, illustrating a continuation of the slowing growth outlook for the UK economy.

“Some of the key drivers of the move were cheaper gas prices, electricity and petrol. Nevertheless, this was offset by air and sea travel falling at a slower rate than the like-for-like figures the previous year.

“While the annual average wage growth continues to rise and outstrip UK inflation, it is no longer the cost of living that’s the most interesting part of the numbers. Last year, many investors were expecting the Bank of England to counter previous inflationary pressure by increasing interest rates from their prevailing 75 basis points.

"Looking ahead, however, we are now observing a figure below the Bank’s target of 2%, indicating that its previously hawkish stance will now be eased with no sign of any rate rises in the near-term.”

Ends

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No sign of rate rise as inflation dips below 2%
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