UK Inflation Eases In December

by Frankie Norman January 18, 2018, 4:23
UK Inflation Eases In December

'As a result, food CPI inflation probably edged down to 4% in December, from 4.1% in November, shaving 0.01pp off the headline rate.

"These downward contributions were partially offset by prices for motor fuel, which increased between November and December 2017, having fallen a year ago".

'It now seems likely we'll see the rate steadily fall back towards the 2 per cent target over the next year or so'. "We have long expected the rise late past year to be capped around this level because of a lack of underlying wage inflation in the United Kingdom, and indeed inflation should now begin to slide back towards the Bank of England's (BoE) 2% target". In the 2018 national budget, Finance and Economic Planning Minister Patrick Chinamasa said on the outlook, the biggest threat emanates from inflationary pressures the economy faces from potential general price hikes driven by speculative tendencies, arising from the mis-match between electronic bank balances and available foreign exchange. Last week, the price of oil rose to $70 a barrel, its highest level since December 2014.

Mumbai: With the latest inflation prints moving up, the Reserve Bank is likely to raise its inflation forecast for March and may leave the key rates unchanged in the upcoming policy review next month, says a report.

She added: "A rise in oil prices together with the lagged effect of sterling's earlier falls, which is expected to take some time before being fully passed on to consumers, will continue to provide upward pressure on prices".

"Today's inflation figure simply reflects the fact that businesses that sell imported goods are passing on higher import prices - brought about by the fall in sterling - to their customers".

The NBS stated, "The Consumer Price Index, which measures inflation, ended the year 2017 with a rate of 15.37 per cent (year-on-year) in December 2017". The declining inflation rate would be good news for the government in a pre-election year. British households are also still coming under pressure from weak wage growth, which stood at 2.3% in the three months to October, and could remain below the rate of inflation this year. "The pound surged higher at the end of last week in a move which saw the GBPUSD break above resistance around 1.3600 to hit its highest level since its post-referendum sell-off in June 2016. By the same token, it is clear that most inflation estimates by independent analysts are guesstimates designed for other purposes, which are outside worldwide best practice", the RBZ said.

During the period, food inflation on a year on year basis was highest in Kwara (24.46 percent), Nasarawa (22.77 percent) and Yobe (22.60 percent), while Kogi (11.14 percent), Bauchi (14.18 percent) and Benue (15.04 percent) recorded the slowest rise in food inflation.

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