UK Inflation Rate Turns Positive in November


Consumer prices in the United Kingdom went up 0.1 percent year-on-year in November of 2015, rebounding from a 0.1 percent fall in the previous two months, boosted by higher cost of housing, utilities, restaurants and hotels while transport and food prices decreased at a slower pace. On a monthly basis, consumer prices were flat, mainly due to falling clothing prices.

Year-on-year, the biggest upward pressure came from prices of housing and utilities (went up 0.3 percent compared to 0.2 percent in October), restaurants and hotels (increased 1.8 percent compared to 1.6 percent in October) and miscellaneous goods and services (1.3 percent compared to 0.8 percent in October). Transport prices fell at a slower pace (-2.1 percent following a 2.6 percent drop in October) as well as cost of recreation and culture (-0.1 percent compared to -0.4 percent in October) and food and non-alcoholic beverages (-2.4 percent compared to -2.7 percent in October). In addition, prices of clothing and footwear were flat, following a 0.8 percent rise in October. 

On a monthly basis, consumer prices posted no growth, slowing from a 0.1 percent increase in October. The largest downward contribution came from clothing and footwear prices (down 0.1 percent compared with a rise of 0.7 percent a year ago). This is the first fall in prices between October and November since official records began in 1996 and follows the largest September to October price increase on record. 

The largest upward contributions came from transport prices (down 0.7 percent between October and November this year compared with a larger fall of 1.2 percent between the same 2 months a year ago), mainly motor fuels and second-hand cars. Petrol prices fell by 1.5 pence per litre this year compared with a fall of 3.0 pence per litre a year ago while diesel fell by 0.6 pence this year compared with 2.9 pence a year ago. Second-hand car prices rose by 1.6 percent this year compared with a fall of 1.0 percent a year ago. Prices of alcoholic beverages and tobacco fell by 0.1 percent between October and November this year compared with a fall of 1.2 percent between the same 2 months a year ago. The upward contributions came from spirits and wine. Cost of miscellaneous goods and services rose by 0.3 percent compared with a fall of 0.1 percent a year ago. Some of the upward effect came from car insurance premiums which rose by more than a year ago, with Insurance Premium Tax rising from 6 percent to 9.5 percent at the start of November 2015 as announced in the Summer 2015 Budget. 

Annual core inflation rate which strips out increases in energy, food, alcohol and tobacco was recorded at 1.2 percent in November, up from 1.1 percent in the previous month.

UK Inflation Rate Turns Positive in November


ONS | Joana Taborda | joana.taborda@tradingeconomics.com
12/15/2015 9:55:09 AM