UK Inflation Rate Slips Into Negative Territory


Consumer prices in the United Kingdom decreased 0.1 percent year-on-year in September of 2015, due to falling fuel, food and clothing and footwear cost. It is the first annual drop since April, below market expectations.

Year-on-year, transport prices recorded the biggest drop (-2.7 percent), falling for the eleventh straight month and the deepest decline since April. Food prices decreased 2.3 percent (down 2.4 percent in August), cost of recreation and culture went down 0.8 percent (-0.9 percent in August) and prices of clothing and footwear decreased 0.6 percent (+0.6 percent in August). In addition, prices of housing and utilities rose a meager 0.1 percent, compared to a 0.4 percent gain in the previous four months. 

On a monthly basis, consumer prices also fell 0.1 percent, following a 0.2 percent gain in August. The largest downward contributions came from prices of clothing and footwear (up 2.8 percent between August and September this year compared with a larger rise of 4.0 percent between the same 2 months a year ago). As prices rose by less than a year ago, this resulted in a downward contribution to the CPI 12-month rate. Clothing prices, overall, always rise between August and September. However, this was the weakest growth since 2008, with a higher proportion of clothing items on sale in September 2015 when compared with September last year. Cost of fuels and lubricants fell by 2.9 percent between August and September this year compared with a smaller fall of 0.6 percent between the same 2 months a year ago. The largest downward contribution came from petrol, with prices falling by 3.7 pence per litre compared with a fall of 0.8 pence per litre a year ago. Diesel prices are now at their lowest level since December 2009, standing at 110.2 pence per litre. In addition, prices of gas fell by 2.1 percent between August and September this year, compared with no change between the same 2 months a year ago, with price reductions from a major supplier. There were no notable upward contributions to the change in the CPI 12-month rate between August and September 2015.

The core inflation rate which strips out increases in energy, food, alcohol and tobacco was recorded at 1 percent in September, the same as in August.

UK Inflation Rate Slips Into Negative Territory


ONS | Joana Taborda | joana.taborda@tradingeconomics.com
10/13/2015 9:54:26 AM