The UK’s brief period of negative inflation is expected to have come to an end in November but the recent tumble in oil prices should keep price pressures low for some months yet, economists predict.
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West Texas Intermediate (WTI) U.S. crude futures were at .41 per barrel, down 35 cents after touching .12, their lowest since February 2009.
In November past year, it was at 3.27 per cent. Overall, consumer food inflation rose to 6.07 per cent in November.
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The 0.50 percent annual rate still shows that inflation is too low in the United States, but it was the largest price increase since December 2014. The cost of electricity, however, increased 0.3 per cent. “This is a theme that is set to continue in the coming months as moderate further falls in the price of petrol this year are outweighed by bigger declines a year earlier”, he said.
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Excluding food and energy, CPI rose 0.2% in November from a month ago, the same as October and in line with analysts’ expectations.
Whatever increase in core CPI reflected steady gains in the cost of rents, airfares, new motor vehicles and medical care.
Food prices dipped 0.1% after gaining 0.1% in the prior month.
Overall inflation was curbed by a 1.3 per cent drop in energy prices.
Prices of food also weakened 0.1% on the month, amid weakness in agricultural prices this year.
Read the BLS release.
While the reading shows inflation remains historically weak, held down largely by low gas prices, economists welcomed the signs of an acceleration in core prices, saying it could support the view of many Fed officials that inflation will gradually move toward the central bank’s target.
For the year ended November 30, core prices were up 2 percent.
It is also expected to contend with a potentially weakening rupee should outflows from emerging markets gather pace if, as widely anticipated, the Federal Reserve hikes United States interest rates this week.
The fall in prices of all the major components in the energy index except electricity kept inflation unchanged. Another inflation measure that Fed policymakers monitor more closely is further below the Fed’s benchmark.
The index for poultry advanced 0.5 percent in November, while the eggs index declined 3.8 percent. Once again this places little pressure on the Bank of England to lift interest rates.
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Medical care costs increased 0.4%. The Fed has acknowledged that a stronger dollar and falling energy prices will have a significant impact on inflation.
