Inflation Falls on Low Petrol Prices

Inflation fell in December 2018 to 2.1%pa according to the Office for National Statistics (ONS). That’s its lowest level in almost 2 years.

Inflation eased largely due to a large drop in petrol and oil prices as well as lower air fares assisted with lowering the rate.

• Transport fuel prices were at 3.4% in December lower than the 12% growth rate from mid last year.
• Global oil prices were at $60.70 (£47.30) a barrel, lower than October where they were $86.00 (£67.00).
• In autumn a litre of unleaded fuel was 131p and was down to 121p in December 2018..

Core inflation that excludes volatile energy and food prices climbed to 1.9%pa in December higher than November’s 1.8%pa.

The Bank of England suggests a likely rise in the cost of borrowing i.e. interest rates over the next 2 years, due to pressures on rising prices within the UK economy and uncertainty over Brexit.  If there is a No Deal Brexit in March analysts feel the pound could fall again and prices will rise. 

Adding to this, on property, the ONS suggests: “UK house price growth is lower than last year at 2.8%pa but rose from 2.7%pa rate in October, but not as good as the 8%pa it was before the Brexit vote.”