UK consumer price inflation inches

Against the backdrop of renewed weakness in oil prices, which touched new lows on Wednesday, economists say the expected reversion to the Fed’s 2 percent inflation target is slowing.

The so-called core CPI, which strips out food and energy costs, edged up 0.1 percent after rising 0.2 percent for three straight months.

In the fourth-quarter, CPI inflation fell to just 0.1%, from 0.4% in the third-quarter.

Services prices, excluding energy services like home heating, rose 2.9% from a year earlier in December, the biggest annual rise since October 2008.

Building permits declined 3.9 percent to a 1.23 million-unit rate last month, pulled down by an 11.4 percent plunge in permits for multi-family buildings. These data has also fuelled speculation about the United States central banks resolve to announce yet another interest rate hike in March.

New Zealand’s inflation rate usually falls in the December quarter with seasonally lower vegetable prices but it was accelerated in the latest figures by falling petrol prices.

The increase in the consumer price index (CPI) to 0.2 per cent from November’s 0.1 per cent was primarily due to a sharp rise in Christmas air fares offsetting falls in food and clothing prices. “This could be a transitory fall in the inflation rate caused by lower prices of oil and gasoline that would stabilize relatively soon, especially if some uncertainties about the slowdown in certain emerging market economies are cleared”.

Prices for tradable goods and services fell 1.8 percent, with the stronger New Zealand dollar lowering prices for petrol and overseas package holidays. This morning it was up 0.6% against the euro to 1.315 and up 0.5% against the dollar to 1.432.

A slump in crude prices by more than 40 percent in the past year has put pressure on the currency of Africa’s biggest oil producer, pushing up consumer prices, and cutting government revenue.

Real average weekly earnings inched up by 0.1 per cent in December from the prior month, but this reflected flat earnings combined with slightly more purchasing power from December’s lower consumer prices.

The chancellor has announced a number of measures to cool house price growth, including a hike to stamp duty on higher-priced properties.

Minutes of last week’s MPC meeting showed the Bank believes United Kingdom growth has also been weaker than it predicted in November and that inflation will remain far below its 2% target for some time yet.