Belfast Telegraph

Inflation falls to four-year low as energy hikes yet to kick in

By Graeme Evans

Pressure on Northern Ireland households has lessened after a fall in the UK rate of inflation, official figures confirmed.

Inflation fell to a four-year low of 2.1% in November as the rise in the price of food eased.

The Consumer Prices Index rate (CPI) has not been lower since November 2009, when it stood at 1.9%.

Yesterday's figure from the Office for National Statistics (ONS) will ease pressure on the Bank of England as it brings inflation closer to its 2% target.

One reason behind the decline is that large rises in household energy bills have yet to take effect.

Danske Bank chief economist Angela McGowan said: "This week's fall in UK inflation indicates that financial pressures on households continue to fall.

"The persistent gap over the past few years between rising prices and static earnings has finally started to narrow.

"The fact that the fall in inflation was driven by food and household utility bills is good news for Northern Ireland where households typically spend 12% and 11% respectively of their disposable incomes on these two items."

The sting in the tail is that rises in household energy bills are likely to make a large upward contribution in December's figures.

The price of food was flat in November compared with the month before, while the annual rate of inflation in the sector fell to 3% from 4.3% in October.

The lower rate comes partly because of comparisons with last year when poor weather affected crops and pushed up prices more steeply.

The slowdown in food inflation should provide a crumb of comfort to squeezed households as they stock up ahead of Christmas.

Cost of living increases continue to outstrip regular pay rises, with the last published figures showing wage growth at 0.8%.

Meanwhile, the cost of filling a Christmas stocking has increased, with games, toys and hobbies up 2.8% on October, taking the annual increase in prices in the sector up to 1.8%.

Restaurants and hotels increasing their rates by a smaller amount made a downward contribution to inflation.

Petrol prices also fell in November, but less steeply than last year, meaning they made an upward contribution to the overall rate.

A separate measure of inflation, the retail prices index (RPI), remained the same at 2.6%.

A new measure of inflation, CPIH, which includes housing costs, fell from 2% to 1.9%. Another new measure, RPIJ, rose from 1.9% to 2%.

Belfast Telegraph

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