United Kingdom Inflation December 2018

United Kingdom

United Kingdom: Inflation dips in December

January 16, 2019

Consumer prices rose 0.2% in December over the previous month, matching November’s figure. December’s reading was underpinned by higher prices for food and non-alcoholic beverages and transport.

Inflation fell from 2.3% in November to 2.1% in December, matching market expectations and marking the lowest reading in nearly two years, on the back of lower fuel prices. Inflation is now only just above the Bank of England’s (BoE) 2.0% target. Core inflation—which excludes food and energy costs—inched up from 1.8% to 1.9%.

Looking ahead, inflation is likely to stay close to the BoE’s target, supported by the recent fall in oil prices. However, higher wage pressures will provide upward pressure. The outcome of the Brexit process is a key risk to the inflation outlook, as a no-deal Brexit could lead to a sharp currency depreciation and hence fan price pressures, even in the face of weaker domestic demand.

According to the November Inflation Report, the Bank of England sees inflation at 2.1% in Q4 2019 and 2.1% again in Q4 2020. FocusEconomics Consensus Forecast panelists expect inflation to average 2.1% in 2019 and 1.9% in 2020.

Author:, Economist

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United Kingdom Inflation Chart

UnitedKingdom Inflation December 2018

Note: Annual and monthly variation of consumer price index in %.
Source: Office for National Statistics (ONS) and FocusEconomics calculations.

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