United Kingdom: Inflation dips in November
December 19, 2018
Consumer prices rose 0.2% in November over the previous month, up from October’s 0.1% increase. November’s figure was underpinned by higher prices for clothing and footwear; and alcoholic beverages and tobacco.
Inflation fell from 2.4% in October to 2.3% in November, matching market expectations and marking the lowest reading since March 2017, on the back of lower petrol prices. However, inflation was still above the Bank of England’s (BoE) 2.0% target. Core inflation—which excludes food and energy costs—dipped from 1.9% to 1.8%.
Looking ahead, the general trend for inflation is likely to be downward, supported by the recent sharp fall in world oil prices. However, faster wage growth and the weaker sterling could slow inflation’s return to the Bank of England’s target.
UK Inflation Forecast
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 2.0% in 2020.
Author: Oliver Reynolds, Economist