UK Inflation Close to Target

Consumer price inflation dropped to 2.1% in November, from 2.2% in October, within a whisker of the 2% target. Interstingly, the CPIH measure, including owner-occupiers’ housing costs, came in at 1.9%.

The fall in inflation is welcome, particularly given that inflation was more than 5% just two years ago. The latest drop benefited from lower food inflation and, perhaps surprisingly, energy. This may not last – recently-announced energy price hikes have yet to affect the figures – but there are good reasons to think other factors could keep CPI inflation close to 2%.

The RPI inflation rate was higher, at 2.6% (unchanged on October). This is the kind of relationship between CPI and RPI inflation (the latter 0.5% to 0.75% higher) you would expect. More here.

This piece is cross-posted from EconomicsUK.com with permission.