UK Annual Inflation Rate at 23-Month Low of 2.1%


The annual inflation rate in the United Kingdom declined to 2.1 percent in December 2018 from 2.3 percent in the previous month, in line with market expectations. It was the lowest inflation rate since January 2017, mostly due to lower cost of petrol and air fares.

Year-on-year, prices slowed for transport (3.4 percent compared to 4.9 percent in November), namely fuels and lubricants (3.4 percent compared to 8.9 percent) and transport services (1.5 percent compared to 3.9 percent); miscellaneous goods and services (0.1 percent compared to 0.4 percent) and furniture, household equipment and maintenance (0.4 percent compared to 0.7 percent). Also, cost of clothing and footwear fell further (-0.9 percent compared to -0.8 percent). Meanwhile, prices rose at a faster pace for food and non-alcoholic beverages (0.7 percent compared to 0.5 percent); recreation and culture (2.8 percent compared to 2.5 percent) and restaurants and hotels (3.1 percent compared to 2.7 percent). Additionally, inflation was steady for housing, water, electricity, gas and other fuels (2.8 percent, the same as in November).

The consumer prices index including owner occupiers’ housing costs (CPIH) increased by 2.0 percent in December, easing from a 2.2 percent gain in November. 

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, went up by 1.9 percent, after rising 1.8 percent in the prior month and above market consensus of 1.8 percent.

On a monthly basis, consumer prices advanced 0.2 percent, unchanged from the previous month and matching market forecasts. Prices rebounded for transport (0.8 percent compared to -0.4 percent in November) and cost increased further for food and non-alcoholic beverages (0.9 percent compared to 0.1 percent) and furniture and household equipment (1.1 percent compared to 0.2 percent). On the other hand, cost of clothing and footwear dropped (-1.0 percent compared to 1.5 percent).

UK Annual Inflation Rate at 23-Month Low of 2.1%


ONS | Stefanie Moya | stefanie.moya@tradingeconomics.com
1/16/2019 9:54:21 AM