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Inflation plummets to record low 0.5% in December

UK inflation fell by 50 basis points to 0.5 per cent in December, the joint-lowest figure on record, says the Office for National Statistics.

The latest consumer prices index shows inflation dropped from 1 per cent in November 2014, and from 2 per cent in December 2013. The last time inflation fell to 0.5 per cent was in May 2000.

According to the ONS, stagnant gas and electricity prices in November – compared with energy price increases a year earlier – were a key contributor to the decrease in inflation.

Falling oil prices also led to lower diesel and petrol revenues than a year earlier, placing further downward pressure on the rate of inflation.

Separately, the retail prices index fell 40 basis points to 1.6 per cent between November and December.

Investec Wealth & Investment head of UK equities Guy Ellison says: “UK inflation undershot expectations for December, coming in at 0.5 per cent and driven by a combination of lower food and energy bills. Indeed, with the ongoing fall in the oil price there is a chance that headline CPI approaches 0% in the coming months.”

“The broader reaction to today’s data is likely to be modest weakness for sterling, as the need for the Bank of England to raise rates sooner rather than later to ward off inflation diminishes.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. I take it Andrew Sentance is still being paid for his wisdom. You remember, the one who kept telling his colleagues at the BoE to raise interest rates to protect against inflation.

  2. @ Ken

    Quite. Furthermore, stop talking about RPI. It’s hugely outdated, overstating inflation by 0.8% at least. Private debts are going to be a lot harder to service. Negative inflation here we come!

  3. Readers may like to have a reading of this writer’s monumental predictions about global economies published online on as early as 2 June 2014 in article – Stressful times ahead for world economy in 2015 and 2016 – at http://www.astrologyweekly.com. It was predicted by this writer that commencing from November 2014 and on, global economy is likely to experience a turmoil due to , among other things, oil and gas. This prediction has come accurate. Further, readers may note predictions for year 2015 to mid- 2016. Alist of commodities and regions or nations likely to be impacted during the aforesaid period has been broadly brought out. It may however be observed here that these predictions of likely trends are indicative and not deterministic suggesting that, in human affairs or happenings, there is always room for reform, salvaging and improvement through a renewed, sufficient and appropriate strategy.

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