Although this is the first time since January previous year that inflation has exceeded 0.1%, investors should acknowledge that the rate remains low by historic standards.
Advertisement
“The Headline Index increased by 9.6 per cent (year-on-year), 0.2 per cent points higher from rates recorded in November”, the December Consumer Price Index (CPI)/ Inflation Report issued by the NBS in Abuja.
Movements in transport costs, particularly air fares and to a lesser extent motor fuels, were the main contributors to the rise in the rate. This compares with a fall of 0.2 per cent between the same two months a year ago.
Property values in England also reached a new all-time peak in November, increasing by 8.3% annually to reach £302,000 on average, according to the Office for National Statistics (ONS).
Excluding London and the southeast, United Kingdom house prices increased by 5.8 per cent in the year to November 2015.
On a month-on-month basis, it said that both the urban and rural indices increased at the same pace, both increasing at 1.0 per cent in December, 0.3 per cent points from 0.7 per cent in November.
“In particular, imported food items within the food and non-alcoholic beverages divisions, alcoholic beverage, tobacco and kola, clothing and footwear and transportation divisions all impacted the index, ” it said.
Also FSDH Merchant Bank analysts in its Inflation Watch say “we expect the December 2015 inflation rate (year-on-year) to inch up to 9.42 per cent from 9.37 per cent recorded in November 2015”.
“Gertjan Vlieghe this week became the latest MPC member to dampen expectations of a rate rise in a very “dovish” speech, noting that “the appropriate real interest rate for the economy might be very low for years to come”.
Mould adds that further loosening of monetary policy in the west could be on the cards in the next few years.
Persistently low inflation suggests borrowing costs in Britain are likely to stay untouched for longer than previously thought, as economists forecast even weaker inflation on the back renewed price falls in commodity prices and a slowdown in the pace of pay growth. Food price inflation climbed to 10.6% from 10.3%.
‘There’s little hope for an improvement in an interest rate rise for savers, so those looking to potentially grow their money over the long term should consider stocks & shares Isas, although risk is attached, ‘ says Calum Bennie, savings expert at Scottish Friendly.
Advertisement
“Sterling rose by one cent against the Dollar and around 1% against the Euro on Tuesday, following the release of higher than expected United Kingdom inflation data”.
