Inflation dips to 20-month low

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November inflation

Inflation slid to a 20-month low in November, pulled down by a drop in the price of some electronics as well as petrol and concert tickets.

The latest inflation figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) fell to 2.3 per cent last month, compared with 2.4 per cent in October.

This was the lowest level since March 2017 and is slightly above the Bank of England’s two per cent target.

The decline also matches the expectations of economists who had predicted 2.3 per cent.

A 2.4 per cent drop in price tags on media-playing equipment such as TVs, CD players and DVD players, helped bring about the latest inflation rate, along with a drop in the price of petrol, airfares and a range of recreational and cultural goods and services such as concert and theatre tickets.

“Inflation was little changed as falling petrol prices, thanks to a substantial drop in the cost of crude oil, were offset by rises in tobacco prices following the duty changes announced in the Budget,” ONS head of inflation Mike Hardie said.

Meanwhile, the Retail Prices Index (RPI) – a separate measure of inflation – was 3.2 per cent.

This was lower than the 3.3 per cent recorded in October.

However, the CPI including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 2.2 per cent in November, which was unchanged from October.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, warned that the dip in the CPI marked the start of a sharp decline in the coming months.

“Inflation still looks set to be below the two per cent target right from the start of 2019 and to average just 1.8 per cent over the course of the year,” he said.

“Modestly below-target inflation, however, won’t stop the MPC (Monetary Policy Committee) from hiking bank rates next year, as the committee believes that interest rates still are well below neutral levels and that no spare capacity exists.”

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