United Kingdom: Inflation declines further below target in December, leaving door open to monetary easing
January 15, 2020
Consumer prices were flat month-on-month in December, following November’s 0.2% rise. December’s figure was underpinned by higher food prices offsetting lower clothing and footwear prices.
Inflation fell to 1.3% in December from 1.5% in November, moving further below the Bank of England’s (BoE) 2.0% target and undershooting market expectations of 1.5%. Muted inflation in recent months has being driven in part by low energy prices following changes to the price cap set by the energy regulator. That said, core inflation—which excludes food and energy costs—was also down, to 1.4% in December from 1.7% in November. Tepid inflation raises the chance of a rate cut by the Bank of England at its meeting in late January.
Author: Oliver Reynolds, Economist