UK inflation: We’re back in the black as inflation moves into positive territory
UK inflation rose to 0.1 per cent in November, figures by the Office for National Statistics showed today – putting the UK back into positive territory for the first time since July. But analysts were less than optimistic about its ability to stay in the black.
The figures showed rises in transport costs and alcohol and tobacco prices pushed inflation up – although that was offset by a dip in clothing prices.
Inflation fell 0.1 per cent in October, after a 0.1 per cent fall in September and flat growth in August. The figure has remained anaemic throughout the year, hovering around a 0.1 per cent rise or fall since January, when it posted 0.3 per cent growth.
After oil prices fell below $37 per barrel for the first time since 2008 yesterday, analysts warned the positive figure was likely to be temporary.
“Today’s move into positive territory is likely to be short-lived with the massive fall in oil prices and the supermarket discount wars likely to keep a lid on UK inflation as we head into 2016," said Maike Currie, associate investment director at Fidelity International.
"I expect UK CPI to continue see-sawing around the zero-mark for the near future.
“Deflation is a double-edged sword which can have wreak economic havoc but can also kick start regenerative economic forces. The positive side effects of deflation as manifested in fuel in food prices is that it provides a boost to real incomes. In both the US and UK, falling prices coupled with a strengthening labour market, resulting in job and wage growth, raises real incomes."
