Inflation Slight Fall to 3.0 Per Cent.
The Office for National Statistics has today released inflation figures for December 2017, with the headline CPI inflation falling slightly from 3.1% pa to 3.0% pa.
Silent on RPI though! Again, there was no fan fare of headlines that the old measure of inflation, RPI, went up yet again from 4% pa to 4.1% pa.
Inflation + Housing Costs CPIH
The Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate fell from 2.8% pa to 2.7% pa. This is known as CPIH and a benchmark we believe that now includes owner occupier housing costs as mortgage interest rates are low. This is not CPI but CPIH.
Consumer Prices Inflation CPI
The Consumer Prices Index (CPI) fell from 3.1% pa to 3.0% pa. This is a key Bank of England (BoE) number and relieves pressure on the Bank of England to increase interest rates.
Retails Prices Index (RPI) – the old measure of inflation
RPI went up yet again from 4.0% pa in November 2017 to 4.1% pa. Although this is no longer an official 'National Statistic', it certainly still keeps the pressure on the Bank of England to increase interest rates and strengthen the £ as imported food and goods still eats into our pockets.
The Office for National Statistics suggests that the decrease was driven by air fares falling between October and December but by less than a year ago and falling prices for travel goods and financial services but rising prices for a range of recreational and cultural goods and services, most notably computer games, also had an upward effect (see RPI). We still have fears of higher inflation in 2018 and therefore further interest rate increases later this year.