British inflation has edged up to an 11-month high after a year that showed the least price growth since records began in 1950. As Grace Pascoe reports the official figures take the pressure off the Bank of England to raise rates.
2015 UK inflation at record low
A new record.
But not one to be proud of.
UK inflation averaged zero in 2015, for the first time since records began in 1950.
One factor leading the Governor of the Bank of England Mark Carney to hold off raising interest rates.
(SOUNDBITE) (English) BANK OF ENGLAND, GOVERNOR, MARK CARNEY, SAYING:
“The world is weaker and UK growth has slowed. Due to the oil price collapse, inflation has fallen further and will likely remain very low for longer. This may mean modestly weaker cost growth through this year, with the likely path for inflation, both headline and core, softer as a result. In short, recent developments suggest that the firming in inflationary pressure we had expected will take longer to materialise.”
In December inflation was pushed slightly higher but it was still only 0.2 percent despite a near 27 percent annual increase in airfares.
House prices too were up, but wage growth was weaker.
Joe Rundle from ETX Capital thinks the UK could be heading back into deflation and a rate rise is a long way off
(SOUNDBITE) (English) ETX CAPITAL, HEAD OF TRADING, JOE RUNDLE, SAYING:
“I think we probably will see nothing this year. If anything they might do a symbolic raise towards the end of the year just to get it done, a bit like Yellen did last year.”
Other global factors – like the current slowdown in China – also make a rate rise more remote.
Mark Carney stressed there was no ‘set timetable’