Rolling coverage of the latest economic and financial news
- Latest: Consumer price inflation sticks at 1.5%
- Chocolate pushed food prices up, says ONS
- But hotel and tobacco inflation fell
- Introduction: Brexit fears are hurting the pound
- Sterling hits two-week low vs euro
- Threat of hard Brexit in December 2020 looms
Economists agree that Britain’s low inflation means there’s no chance that the Bank of England will raise interest rates soon.
The BoE sets rates tomorrow, at its last meeting of 2019, but Jing Teow, economist at PwC, doesn’t expect fireworks:
“The below-target level of inflation means that the Bank of England will be under little pressure to raise its policy rates soon.
However, a recovery next year that follows a further easing of political and economic uncertainties could spur further economic activity and spending, giving rise to inflationary pressures in the medium term. “
Inflation is expected to remain well below the Bank of England’s target in 2020, thanks to price caps set on regulated utilities and a stronger pound, giving the Bank of England some room to act if the economy wobbles a little next year.
“The Bank may wish to secure a pre-emptive cut in rates, either in February or May, if recent economic weakness proves more persistent.
Chancellor Sajid Javid has welcomed today’s inflation figures, saying it will help families handle the cost of Christmas.
However, prices are still rising — so households will suffer if their income hasn’t kept pace with inflation.
Contrary to Chancellor’s response , “low inflation “ doesn’t “help… cash go further” as prices still rising – need falling prices, i.e deflation, to get more bang for your buck pic.twitter.com/FQ6KdBWJ2g