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Home > News and Reports > Inflation recedes to lowest level since 2009
Apr 24, 2018
Inflation recedes to lowest level since 2009

The consumer price index fell once again in March, reaching 1.6 percent and marking the lowest inflation rate since October 2009, recently released figures from the ONS reveal.

March’s figures mark the third month in a row that the consumer price index, or CPI, tracked below the 2 percent target established by the Bank of England.

The Office of National Statistics attributed the lower figure primarily to the transport sector, especially fuel prices. While petrol prices across the UK remained the same from February to March, the same period last year saw a 2.2 pence per litre rise in petrol prices.

Diesel prices have fallen by 0.4 pence per litre this year alone, which is in stark contrast to 2018, in which diesel prices rose by 1.9 pence per litre.

“The general expectation is that inflation is likely to continue to run at or below the Bank of England’s 2 percent target for some time, subdued by lower import costs, resulting in turn from sterling’s appreciation this year, as well as lower global commodity and energy prices,” stated Markit’s chief economist, Chris Williamson.

“This means policy-makers have greater leeway to keep interest rates at the record low of 0.5 percent for longer, as the economy goes through a ‘sweet spot’ of robust economic growth, falling unemployment and low inflation,” he continued.

However, Ben Brettel, an economics editor at Hargreaves Lansdown, warns that deflation may pose a more serious threat than inflation.

“There is even an outside chance of further quantitative easing, though this looks unlikely unless we see further sharp falls in inflation over the coming months,” said Brettel.

Marc Ostwald, a rates strategist for Monument Securities, stated that the trend of downward inflation in the areas of fuel, utilities, food, and clothing were expected, but decreasing inflation in these areas was offset by a substantial upward shift in household goods.

According to Ostwald, “Much of this can be laid at the door of the ‘booming’ housing market, with a smaller contribution from health. This is not, per se, something for the Monetary Policy Committee to react to, however it should heighten their sensitivity to housing market trends.”

Housing prices across London reached a record high in March as the average asking price eclipsed £552,530, marking a £8,298 increase over the city’s previous high.

The recent UK property boom has given rise to concerns that the UK‘s housing market is in a bubble, due to continuing imbalances in supply and demand.

2 Comments   |   CATEGORIES:   
  • lauralouise90

    It’s great to see that inflation is low again. In my eyes that means that now is the time to try and help those in debt and in need to recover from it. Laura | EMCAS PPI Claims

  • im-on-skittles

    Here at My Claim Solved we are not to bothered about inflation, we are more interested getting you compensation! | David My Claim Solved

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