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16 January 2019

Rate rises unlikely as inflation falls close to Bank of England target

UK inflation fell to 2.1% in December, reaching its lowest point for nearly two years and bringing it closer to the Bank of England’s target level.

Stuart Ryan, Investment Management Department Manager, said: “Petrol, once again, led the fall following the tumbling of oil prices in recent months; petrol prices fell to an eight-month low, as the cost per litre fell by 6.4p between November and December, compared with a rise of 0.8p a litre in the same period a year earlier.

“Clothing and footwear prices fell as retailers slashed prices in the hope of winning customers during the festive season. Air fares also helped push down inflation, with prices rising less than they did last year. However, increasing hotel prices and mobile phone charges did apply some slight inflationary pressure.

“As consumer price index inflation continues to fall closer to the Bank of England’s target rate of 2%, it is now less likely we will see a rate rise anytime soon. The central bank will probably feel comfortable waiting for Brexit uncertainty to clear, and for parliament to finally provide some clarity on the UK’s future relationship with the European Union before moving forward.”
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Rate rises unlikely as inflation falls close to Bank of England target

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