UK inflation rate falls to 20-month low as oil prices tumble

UK inflation rate falls to 20-month low as oil prices tumble

uk economy

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UK inflation eased to a 20-month low in November as a sharp fall in oil prices brought down the cost of filling up a vehicle.

Consumer-price growth slowed to 2.3% from 2.4% in October, as forecast in a Bloomberg survey. Core inflation slipped to 1.8% from 1.9%.

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Key insights

Office for National Statistics says downward pressure came from the cost of auto fuel, which fell 1.1% compared with a 1.6% increase in November last year. Other drivers include food, computer games and admissions for live music.

Upward pressures came from clothing prices, hotels and restaurants. Tobacco prices were boosted by budget tax increases. Inflation so far this quarter has undershot forecasts made by the Bank of England (BoE) last month.

The BOE had forecast a CPI rate of 2.5% for both October and November. Brexit crisis has seen traders pare bets on a rate rise next year, despite evidence of growing inflationary pressure in the labor market.

BOE is expected to keep its benchmark rate at 0.75% this week and traders are ruling out the possibility of a hike before Britain leaves the European Union on March 29.

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