UK CPI Down

UK consumer price inflation has fallen again to a four year low of 2.1%

UK CPI inflation has fallen from 2.2% to 2.1% in November. The decline is mostly driven by energy prices but there may be an upward blip in December as the CPI figure did  not capture the recent utility price increases.

CPI Percentage Change over 10 years

That said energy fundamentals should be on a downward path given the recent Iran accord and the rising fuel independence in the USA driven by natural shale gas illustrated in the chart.

Electricity generation by fuel

 

Food CPI inflation also fell from 3.9% to 2.8% in November, and the fall in global agricultural commodity prices this year suggests that it could fall further in 2014. 

Overall UK inflation could dip below 2% in 2014 alleviating costs pressures which is good for the sterling area including Jersey.

it will also make for an interesting party manifesto season as some of the real living cost increases of the last few years begin to unwind with real increases in living standards likely to return.

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