Britain falls back into deflation

The Bureau also maintained that on a month-on-month basis, the pace of increases of the headline index remained constant for the second consecutive month at 0.6 per cent, the lowest pace recorded this year.

“The main upward contribution came from housing-related prices, which increased 1.2 percent”, prices senior manager Chris Pike said.

Inflation rate in fuel and power segment was (-)17.71 per cent, while that in manufactured products was (-)1.73 per cent in September.

Stubbornly weak producer prices are threatening to erode firms’ profits and add to their debt burdens, conditions which analysts expect to persist for the remainder of the year. “While money market interest rates have remained stable, new loans extended to support non-policy activities are expected to be lukewarm, and it poses a risk to the future economic growth”.

During the April-September period, build up in inflation rate was 0.28 per cent compared to a build up rate of 2.61 per cent in the corresponding period of 2014-15.

The price rise in spices category was higher at 9.27 per cent and for non-alcoholic beverages at 4.32 per cent. Break-wise; retail inflation rose to 5.05 per cent for rural segment in September and for urban sector it was at 3.61 per cent.

Sluggish demand caused consumer prices to rise slower than the projected 1.8%.

Inflation in food articles inched up to 0.69% in September, from (-)1.13% in August.

Consumer Food Price Index stood at 3.88% in September 2015, up 1.68 percentage points from 2.20% in August 2015. But further rate cuts are going to put renewed pressure on China to devalue its currency back to at least the CNY 6.5-6.6 level by year-end.

The note said the recent rebound in the New Zealand dollar, the lack of underlying non-tradables inflation and weak pricing intentions indicated weak overall inflation pressures.

A rare bright spot in the trade data was an apparent stabilisation of China’s imports of iron ore, even as the economy slows.

According to Nomura, “Given the lackluster growth outlook, we continue to expect moderate fiscal stimulus from the central government and continued monetary easing”.