Consumer prices fell an annual 0.1 percent after stagnating in August, the Office for National Statistics said in London Tuesday.
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Last month, the ONS said CPI eased back to zero in August, from 0.1 per cent in July. ‘This offers little suggestion that underlying inflationary pressures are building in the United Kingdom economy, despite continuing strength in wage growth, ‘ he said.
A rise in a few food prices lifted Indian retail inflation in September after it had hit a record low in the previous month, but inflation is expected to remain low thanks to falling global commodity prices.
The retail-price measure of inflation slowed to 0.8 per cent from 1.1 per cent, the least since November 2009.
The market appears to have factored in the lack of drive in United Kingdom inflation, particularly since the central bank signalled it did not expect inflation to touch 1% until at least April next year.
Today’s result is simply evidence of how the United Kingdom economy is delivering at the moment – not exactly a steam train bounding ahead at full speed, but certainly enough to keep things moving along at a steady enough pace.
The weak CPI was mainly due to declines in pork and vegetable prices and will gradually stabilize, Xu said. This indicates that despite a deficient monsoon season, prices of most food items have not gone up, except for pulses which rose 23.65% in September, according to the data.
September’s CPI inflation figure is also used to calculate the following year’s rises in State pensions, although the Government’s “triple lock” ensures an increase of at least 2.5% as the guarantee means it will increase by whichever is the greater out of average earnings, September’s inflation rate or 2.5%.
Falling prices can spell bad news for the economy if it continues for a long period of time because it encourages consumers and businesses to delay purchases.
“When you can go outside in a T-shirt, as was possible in London this morning, people aren’t buying winter coats or jumpers… unemployment has stopped falling; surveys of service companies and manufacturers suggest the last three months of the year may see a gentle reduction in the rate of expansion”.
‘The markets have over-reacted in pushing back the timing of the first interest rate hike to 0.75% to late 2016 or even early 2017, ‘ he said.
Commenting on the CPI figures, Devendra Kumar Pant, chief economist, India Ratings & Research said: “September 2015 CPI at 4.41 percent was higher than Ind-Ra expectation of 3.9 percent”.
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The biggest downward impact on the annual inflation rate was from clothing and footwear, as well as gasoline.
