NIESR: Monthly CPI Tracker – Drop in CPI Inflation Expected to be Temporary
Drop in CPI Inflation Expected to be Temporary
The consumer price index inflation rate declined to 1.3 per cent in the year to December 2019, as per data released by the ONS. Our new analysis of 129,516 locally-collected goods and services indicate that inflation in the restaurants and hotels and clothing and footwear categories decreased in the twelve months to December 2019. Consumers have also benefitted from lower inflation on food and non-alcoholic beverages during the festive season. Underlying inflation, which excludes the most extreme price changes, grew at 0.8 per cent in December, down from 1 percent in November. This is consistent with the Bank of England’s target of 2 per cent in the 12 months to December.
- Underlying inflation decreased by 0.2 percentage points to 0.8 per cent in the year to December 2019, as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes (figure 1).
- At the regional level, underlying inflation was highest in the North at 1.3 per cent and lowest in the South West at 0.6 per cent in the year to December 2019 (table 1).
- 17.5 per cent of goods and services prices changed in December, implying an average duration of prices of 5.7 months. 5.4 per cent of prices were reduced due to sales, 3.1 per cent fell for other reasons and 9.1 per cent were increases (figure 2).
- The historical relationship between current trimmed mean inflation and future CPI inflation implies CPI inflation of 2 per cent in the year to December 2020.
Janine Boshoff, Economist, Macroeconomic Modelling and Forecasting, yesterday said:
“Headline CPI inflation declined to 1.3 per cent in the year to December 2019, down from 1.5 per cent recorded in November. Our analysis of approximately 130,000 goods and services included in the basket, indicates that consumers benefitted from lower inflation in clothing and footwear, and restaurants and hotels. Our measure of underlying inflation, which excludes extreme price movements, decreased by 0.2 percentage point to 0.8 per cent in December. Underlying inflation decreased in 11 regions of the UK. On this basis, we expect CPI inflation to settle around the Bank of England’s target of 2 per cent in the coming year.”
Please find the full commentary in attachment
Notes for editors:
For further information and to arrange interviews, please contact the NIESR Press Office:
Luca Pieri on 020 7654 1931 / email@example.com
NIESR aims to promote, through quantitative and qualitative research, a deeper understanding of the interaction of economic and social forces that affect people's lives, and the ways in which policies can improve them.
Latest News from
IPPR - Investing in a green recovery could create 1.6 million new jobs after Covid crisis, report finds03/07/2020 16:20:00
Plan for a clean and fair recovery, including drive to insulate homes and fit low-carbon heating, is ‘best way’ to boost economy says IPPR
IFS - Career disruption caused by COVID-19 threatens prolonged cost for young workers03/07/2020 15:20:00
There is growing evidence that the lockdown has had particularly negative impacts on young people’s labour market outcomes. New IFS research, funded by the Turing Institute, shows that the COVID-19 pandemic threatens to severely disrupt the career progression of young workers, suggesting that negative economic impacts on this age group may last well beyond the easing of the lockdown.
IPPR - Youth unemployment set to more than double by end of the year according to think tank03/07/2020 14:20:00
£3 billion government intervention needed to create hundreds of thousands of jobs and support young people, says IPPR
Civitas - ‘Schools should reopen fully’ in September – government must ‘drop all requirements for children to practice social distancing with immediate effect’, says think-tank report02/07/2020 14:35:00
Given the expectation for school reopening plans in England to be unveiled by the government this week, the government should ‘drop all requirements for children to practice social distancing with immediate effect’, urges a new Civitas report.
Adam Smith Inst - Real New Deal is Boris' Promise of Planning Reform02/07/2020 13:35:00
Despite worrying news of an interventionist ‘New Deal’ for the country, the best noises from the Prime Minister Boris Johnson in his speech in Dudley come in the detail of promised planning reform. Much of which builds on suggestions the ASI has made in recent months and years — including the great research work done by London YIMBY’s John Myers.
JRF responds to the Prime Minister’s speech promising a 'New Deal' for Britain02/07/2020 12:35:00
Helen Barnard, Acting Director of the Joseph Rowntree Foundation responded to the Prime Minister’s speech promising a 'New Deal' for Britain
IPPR North responds to PM’s ‘Build Build Build’ speech02/07/2020 11:35:00
IPPR North Director Sarah Longlands responded to the PM’s ‘Build Build Build’ speech
IEA responds to PM’s plan for the UK’s economic recovery02/07/2020 10:35:00
IEA Senior Academic Fellow Professor Philip Booth responded to the Prime Minister’s plans for the UK’s economic recovery post Covid-19
PM Speech: IPPR reacts to planning and housing plans that ‘fall woefully short’ of what is needed02/07/2020 09:35:00
High Streets put at risk due to plans to reform planning laws, says IPPR
IPPR - Covid housing affordability crisis: three quarters back call for dedicated, affordable housing for key workers30/06/2020 15:35:00
An IPPR report today, together with new polling commissioned by the think tank, warns that housing affordability issues are set to intensify due to Covid-19, with those on low incomes and privately renting most affected.