Publications
Partners
London - UK inflation edged back above zero in November for the first time in four months, a move that still leaves the rate a long way from the Bank of England’s (BoE) target.
Prices rose an annual 0.1% in November after falling 0.1% in October, the Office for National Statistics said on Tuesday. Core inflation, which excludes volatile food and energy prices, accelerated to 1.2% from 1.1%.
The figures follow a warning from BOE officials this month about weak inflation filtering through the economy and affecting wage growth. The central bank expects price growth to be below 1% until the second half of next year and only reach its 2% goal in late 2017.
While the Federal Reserve is expected to lifts its key interest rate on Wednesday, economists forecast that the BoE will keep its benchmark at a record-low 0.5% until at least the second quarter of 2016.
BoE Deputy Governor Minouche Shafik said on Monday that she would wait for wage growth to be sustained at a level consistent with inflation returning to target before voting for an interest-rate increase.
Data on Wednesday is forecast to show that annual income growth slowed to 2.3% in the past three months from 2.5%.
“Inflation is back, but going nowhere fast,” said Paul Hollingsworth, an economist at Capital Economics in London. “We expect it to average around 1% next year - meaning that the MPC will be in no rush to quickly follow the US Fed.”
The 12-month inflation rate in November matched the median forecast of economists in a Bloomberg survey and also ended a two-month streak of negative readings.
According to the ONS, the largest upward effect on inflation last month was from transport costs, reflecting a smaller decline in gasoline prices compared with November 2014.
The main downward pressure was from clothing, with prices falling between an October and November for the first time since records began in 1996. The ONS said it has seen “atypical” price movements since the summer, which may be partly related to milder-than-usual weather.
Separately, the statistics office said input prices at factories fell 1.6% in November from October and were down 13.1% from a year earlier, reflecting the drop in crude oil costs. Producer prices declined 1.5% on a year- on-year basis.
