UK Inflation Falls Back Into Negative Territory

According to the Paris-based statistic office, the consumer prices index (CPI), a key gauge for inflation, rose by 0.3 percent in August.

Imports tumbled by a worse-than-expected 20.4 percent in September, following a 13.8 percent slide in the previous month, data on Tuesday showed. The producer-price index fell 5.9%, extending its streak of negative readings to 43 months, the National Bureau of Statistics said on Wednesday.

“Also the corresponding rural index also went up to 8.6 percent in September from 8.5 percent in August”, the report added.

Analysts say a fall in local fuel prices and the government’s promise to contain fiscal deficit at 3.6 percent of GDP this fiscal year could dampen demand-led inflationary expectations in Asia’s third largest economy.

Britain has unexpectedly veered back into deflation in September thanks to falling petrol costs, gas bills and High Street sales.

This is the second time this year that United Kingdom inflation has been negative (April was the last time), with the CPI registering growth in only three of the past nine months: 0.3 per cent in January and 0.1 per cent in both May and July.

While the economy is growing and the labour market tightening, inflation remains far below the bank’s 2 per cent target and officials are wary of the potential impact of the global slowdown.

The weak CPI was mainly due to declines in pork and vegetable prices and will gradually stabilize, Xu said. WPI food price inflation rose to 0.2% y-o-y from -1.5% in August 2015, with faster inflation momentum in the pulses (38.6% y-o-y) and spices (11.8% y-o-y) categories.

Howard Archer, chief United Kingdom and European economist at IHS Global Insight, said: “Supermarkets remain heavily engaged in a food price war”.

Most analysts said they expected inflation rate to increase successively over a two-month period, a trend that could worsen the negative returns on Nigerian equities.

But Ulrich believes China’s GDP will be about 7 percent this year as domestic consumption is delivering growth.

Making the fourth cut in interest rates this year, the RBI cut the repo rate, at which it lends to commercial banks, by 50 basis points last month to bring it down to 6.75 percent.