Tuesday, January 19, 2016

Inflation rises to 0.2%

The rate of inflation on the Consumer Price Index (CPI) measure rose to 0.2% in December from 0.1% in November, according to the Office for National Statistics (ONS).

Increases in transport costs - specifically air fares and motor fuels - were behind the rate rise, partly offset by reductions in alcohol, tobacco and food prices.

James Tucker, from the ONS, said inflation was still at "historically low levels".
"Today’s small rise in CPI was mainly down to air fares and motor fuels, partially offset by falls in alcohol and food prices."
While this modest rise takes CPI to its highest level for 11 months, it is still at historically low levels."
he said.

Indeed, inflation is still below the target rate given to the Bank of England. Technically the bank is supposed to try to push inflation up towards the range of 1% to 3% - though I have no doubt that they will not do anything so silly. And Mr Carney is supposed to write to George Osborne explaining why for about the tenth consecutive month inflation is below target ...
 

2 comments:

Jim said...

\Why is the target rate for Inflation not 0? I mean I have argued time after time that in a lot of ways deflation is a good thing, its not something to be feared, unless of course its as you pointed out, out of control deflation.

But on the grand scheme of things then a target of -1% to +1% would be more suitable than one of +1% to +3%.

Chris Whiteside said...

I did of course discuss this issue in a blog post in mid December,

http://chris4copeland.blogspot.co.uk/2015/12/as-three-months-of-negative-inflation.html

on which you made a couple of comments at the time. The present target range of 0% to 4% for inflation, which the Bank of England is supposed to try within the middle of e.g. 1% to 3%, was adopted at a time when the economy was used to much higher inflation than we have had since. I still hold the opinion I expressed in December that the Chancellor should set up a review into the possibility of dropping one or more of those figures by one percentage point.