UK inflation edges back into positive territory
- Credit: PA
Inflation edged out of negative territory last month despite a record fall in clothing and footwear prices amid widespread discounting on the high street, driven by unseasonably mild weather.
The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rate of inflation rose to 0.1% in November, ending two months in a row of mild deflation at minus 0.1%.
It is the first time that CPI inflation has turned positive since July, although the slight inicrease still means that the rate has remained in the narrow band between 0.1% and minus 0.1% for 10 months in a row – the longest run of flat or falling prices since records began.
Prices of clothing and footwear fell by 0.1% between October and November, the first time they have dropped month-on-month in November since ONS records started in 1996, with the warm autumn weather thought to have prompted retailers to slash prices to help shift winter items.
However, the ONS said this only partially reversed a sharp increase in clothing prices between September and October, while falls petrol, alcohol and tobacco prices last month were smaller than a year earlier.
Philip Gooding, head of CPI at the ONS, said: “Although the prices of many items continue to fall, because they are falling at a slower rate than at the same time last year, the overall effect is a slight rise in headline CPI.”
Minutes of the Bank of England’s latest interst rates decision last week showed policymakers believe the continued fall in the price of oil could see UK inflation remain lower for longer thatn previousl expected.
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Many economists believe this may further push back any rise in UK interest rates until well into 2016, or event 2017, despite an expectations of a rise in rates in the United States this week.
Chris Williamson, chief economist at Markit, said: “UK inflation remained largely absent in November, and looks set to remain weaker for longer than forecasters have recently been expecting.”
He added: “This is clearly good news for consumers in two respects - low prices boost spending power and the dovish outlook for inflation takes pressure off the Bank of England from hiking interest rates any time soon.”