Prices rose 0.1% year-on year, government statisticians said on December 15, in line with expectations by economists polled by The Wall Street Journal.
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Hargreaves Lansdown senior economist Ben Brettell says: “The plus sign on today’s inflation figure matters little”.
As in previous months, lower oil prices weighed down inflation in November. “Thus, we continue to see core CPI inflation above 2% through 2016”, says Nordea Bank. The cost of electricity, however, increased 0.3 per cent.
The Federal Reserve will wrap up two days of discussions on Wednesday.
Clothing and footwear costs fell 0.1% month-on-month – the first decline the ONS has ever measured in the October-November period.
Interest-rate setters on the Bank of England’s (BOE) Monetary Policy Committee (MPC) will be pleased at the return to positive territory, but they will be more pleased that core inflation, which strips out volatile figures such as energy, food, alcohol and tobacco, has risen to 1.2 percent from 1.1 percent in October. Paul Ashworth of Capital Economics said core inflation “is nearly back to target at a time when the dollar’s surge and the indirect impact of lower commodity prices are probably subtracting 0.5% from the rate”. Britain’s inflation has stuck in a narrow range between plus and minus 0.1 per cent since February, largely due to a slump in oil prices late past year, and is far below the Bank of England’s 2 per cent target. It was the third straight month that the core CPI increased by that margin, and reflected rising rents, airline fares, new motor vehicles and healthcare costs.
The move out of deflationary territory arose partly from a smaller fall in petrol and diesel prices in November than in the same month of past year.
The Fed is widely expected to announce a 0.25-percentage-point increase on Wednesday.
Consumer food price inflation, which has a weightage of about 47 per cent in the retail inflation index, spiked to 6.07 per cent in November from a level of 1.13 per cent in November 2014. An ongoing lack of pricing power is clearly evident in the business survey data despite the robust pace of economic growth being witnessed in the fourth quarter, with PMI surveys showing average prices charged for goods and services unchanged in November. Inflation, however, is no longer trending lower.
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The Labor Department’s overall annual inflation measure is starting to pick up and is expected to accelerate to 1.5% or higher by early next year, partly because of a more favorable year-ago comparison – the plunge in oil prices was well underway in early 2015.
