United Kingdom inflation rate falls to 3%
- Author: Eleanor Harrison Jan 18, 2018,
Jan 18, 2018, 4:21
According to the bureau, food inflation dropped 0.89 points to stand at 19.42 percent as against 20.31 percent recorded in November.
"The continued weakness of underlying price pressures means that the MPC has little need to rush the next rate hike", said Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics.
City economists said they believed that inflation will now head back towards the Bank of England's 2 per cent mandated target as we go through 2018. This is less than 17.26 per cent reported in November 2017, while the corresponding rural inflation rate in December is 16.10 per cent compared to 16.29 per cent recorded in November 2017.
Wage growth is likely to rise to 3 percent or higher this year, Saunders said. On the other hand, protein-based food items such as eggs, meat and fish became expensive by 1.67 per cent during the month.
The slowdown in inflation will bring some relief for households, as wage growth in the country lags behind the rise in prices.
"However, this should be at least partly countered by sterling rising to its highest level against the dollar since the June 2016 Brexit vote".
The NBS stated, "The Consumer Price Index, which measures inflation, ended the year 2017 with a rate of 15.37 per cent (year-on-year) in December 2017".
"Big themes like an ageing demographic and the rise of disruptive technologies are exerting downward pressure on prices", he said. December marks the first slight easing in inflation since June a year ago, but it still exceeds the Bank of England's target of 2 per cent. Sovereign bonds fell in extended trading hours on growing concerns about inflation and speculation the government will miss its deficit target for the year through March 2018 when it unveils its budget February 1.
"Given the decreasing pattern in the year-on-year salary increases, Indian employees could very well see a single digit salary increase in 2018 for the first time since 2011", Sambhav Rakyan, the advisory firm's data services practice leader for Asia Pacific, said in a report last month.
Samantha Seaton, chief executive of financial app Moneyhub, warned that recent price hikes have placed pressure on households due to stagnant wages.
He added that given the continued headwind posed by Brexit uncertainty, "I don't see why the Bank of England would rush to raise rates again this year".
The sharp fall in the value of the pound following the UK's vote to leave the European Union in the summer of 2016 has raised the cost of imports and pushed up the rate of inflation.
In food inflation category in December 2017, food inflation on a year-on-year basis was highest in Kwara (24.46%), Nasarawa (22.77%) and Yobe (22.60%), while Kogi, Bauchi and Benue recorded the slowest rise in food inflation.