Belfast Telegraph

Boost for Northern Ireland consumers as falling price of oil drives down inflation

By John Mulgrew

Northern Ireland consumers are set to benefit from a 12-year low inflation rate as lower petrol costs fuelled by tumbling oil prices pushed it down to just 1%.

The Consumer Prices Index (CPI) - which measures the cost of a series of household goods - showed a drop from 1.3% in October.

November's annual rate of inflation is the lowest since September 2002 - with falling oil prices a key factor for the low figure.

Ulster Bank's chief economist Richard Ramsey said the fall would benefit Northern Ireland households more than other parts of the UK.

"In Northern Ireland we spend much more on items such as heating, food and petrol than elsewhere in the UK," he said.

"While this led to a bigger squeeze on households here when prices were going up, we stand to benefit more now that they are going down."

He said previously higher rates of inflation had "wreaked havoc" with household finances in Northern Ireland.

"When you consider that Northern Ireland has the lowest level of household disposable income of all the UK regions, this implies that Northern Ireland has been more adversely affected from inflation than elsewhere within the UK," he said.

The Bank of England had set a target for the rate of inflation at 2%.

Food prices also fell last month at their fastest rate in the same period - dropping by 1.7%.

That was helped along by supermarket price wars - making Christmas dinner cheaper.

Danske Bank chief economist, Angela McGowan said the 12-year low inflation rate was welcome for Northern Ireland consumers and "private demand" in the economy.

"The collapse in global oil prices is providing a boost to household spending power across the UK," she said.

"This is because the UK imports oil and therefore benefits from the lower price.

"Although good for UK consumers and private demand in the local economy, the oil price shock is also causing a headache for some large oil-producing economies."

Yesterday's announcement comes as the price of oil continued its slide, as Brent crude dipped below $60 a barrel for the first time since 2009.

Meanwhile, most recent figures for the three months to September showed pay rising by 1% year on year.

The fall in inflation adds to hopes of a rise in real-terms wages which have lagged behind the increasing cost of living for six years.

Treasury Chief Secretary Danny Alexander added that the fall in inflation was a welcome early Christmas present to millions of families.

He said: "I am determined that the continuing oil price falls will be passed on to consumers as quickly as possible and in full."

Belfast Telegraph