U.K. Inflation Hits 3-Year Low as Energy Price Cap Takes Effect
Cheaper gas and electricity pushed U.K. inflation to its lowest rate in almost three years last month, bringing respite for Boris Johnson after two days of disappointing data.
Consumer prices rose 1.5% from a year earlier, the least since November 2016, after a new energy price cap came into force, the Office for National Statistics said Wednesday. Core inflation stayed at 1.7%.
The figures will be seized on by Conservatives campaigning for the Dec. 12 general election as evidence that living standards are continuing to rise in the face of Brexit uncertainty. They follow data this week showing wages slowing and job losses mounting amid the weakest economic growth for almost a decade.
Inflation is now well below the BOE™s 2% target, and running at less than half the pace of earnings growth. The BOE expects it to slow further next year and stay below target until the end of 2021.
Gas and electricity prices dropped 4.4% between October and September, leaving them 1.9% lower than a year earlier. Regulator Ofgem estimates its new cap will save 11 million people an average of £76 a year.
These effects were partially offset by clothing and footwear prices, which rose by 1% as stores failed to repeat the discounts seen a year earlier. The ONS said inflation would have stayed at its September rate of 1.7% if the impact of energy prices was excluded.
House prices in England and Wales in September rose 1.3% in September from a year earlier, the same pace as in August. The worst-performing region was London, where prices declined 0.4% as Brexit uncertainty took its toll.
House prices in the U.K. capital have fallen 5.1% since their peak in July 2017, costing homeowners 14,000 pounds ($18,000) on average.
Source : Bloomberg