Falling Oil Price Causes CPI Inflation To Drop To 2.3% In November

Inflation from 2.4% to 2.3% in November
UK inflation fell from 2.4% to 2.3% in November, meeting economist expectations, according to latest figures from the Office for National Statistics (ONS).
The Consumer Price Index (CPI) fell to 2.3% in November as a result of downward pressure from petrol prices, which fell by 2.6 pence per litre between October and November 2018.
CPI had previously remained steady at 2.4% during September and October.
WTI crude oil has fallen to $46 per barrel in recent weeks, down from $76 earlier in the year.
As well as falling petrol prices, the largest downward contributions during November came from a variety of recreational and cultural goods and services, according to the ONS.
Will UK energy stocks cause another disappointment?
Upward contributions came "almost entirely" from tobacco, said the ONS, with prices rising between October and November, reflecting a rise in duty compared to a fall between the same months a year ago.
The rise in duty was reported in Chancellor Philip Hammond's October Budget and came into force one month earlier than it had done in 2017.
Andrew Wishart, UK economist at Capital Economics, said he expected the fall in inflation could mean the Bank of England reaches its 2% target sooner than expected.
"The 30% fall in sterling oil prices since their recent peak means that the fall in inflation in November, from 2.4% to 2.3%, is probably the precursor of a larger fall in December, perhaps to the 2% target," he commented.
Thomas Wells, manager of the Smith & Williamson Global Inflation-Linked Bond fund, said: "The UK inflation outlook remains very difficult to call as so much depends on whether or not we get a trade deal with the EU.
"If we do not get a deal, we would expect a slump in the pound followed by a downturn in growth - in other words, a stagflationary environment. Even we do get a deal, some sectors, such as retail, are beginning to look mortally wounded."
What Advisers Misunderstand About Protection
Protection is rarely rejected outright. More often, it is misunderstood. Most advisers recognise th... Read more
Gyrostat Market Outlook: Looking Beyond The 30-day Volatility Headlines
This outlook examines how financial markets are pricing risk rather than attempting to forecast market... Read more
Gyrostat Capital Management: The Hidden Assumption In Most Portfolios - Stability
Markets do not usually fail portfolios. Assumptions do. Most portfolios are built with car... Read more
Gyrostat February Outlook: Stewardship As Risk Reprices
This monthly outlook examines how financial markets are pricing risk, rather than attempting to forecast ... Read more
Gyrostat Capital Management: Why Risk Management Is Not About Predicting Risk
Why Risk Management is Not About Predicting Risk Financial markets reward confidence, but they punish certai... Read more
Gyrostat January Outlook: Calm At Multiyear Extremes
This monthly Gyrostat Risk-Managed Market Outlook does not attempt to forecast market direction. Its p... Read more