Inflation at Zero Again

Inflation at Zero Percent Again.

The Office for National Statistics (0NS) has today released figures that the UK rate for inflation has fallen back from 0.1% in July to 0% in August. Prices are ‘flat lining’.

The fall has been attributed to falling oil prices and demand for oil (China slowing down) meaning cheaper fuel at the pumps as well as half cheaper clothes, energy, food and drink. Excluding the categories aforementioned, underlying inflation is at 1% meaning that prices of goods and services overall are actually increasing but these have been outweighed by the falling costs of essential items such as food, fuel and drink.

Will interest rates rise?

Given the above news, and confirmation from the minutes of the Bank of England Monetary Policy Committee meeting this month with a vote of 8 to 1 in favour of keeping interest rates at their current level and the fact that the Chinese economy is slowing, we do not believe interest rates will rise at any point this year and it is more likely that interest rates will increase in the first or the second quarter of 2016.