MNI DATA ANALYSIS: UK Dec CPI Down on Falling Fuel Prices>

-UK Dec CPI +2.1% y/y vs +2.3% in Nov

-UK Dec Core CPI +1.9% y/y vs +1.8% in Nov

-UK Dec Input PPI -1.0% y/y vs +3.7% in Nov

-UK Nov House Price Index +2.8% y/y; London -0.7% y/y

By Laurie Laird and Jai Lakhani

     London (MNI) - Consumer price inflation abated in December, falling 

well short of Bank of England forecasts, dampened by a sharp decline in 

fuel costs at the end of 2018. 

     The consumer price index increased by an annual rate of 2.1% last 

month, the slowest pace since January of 2017, matching analysts' 

forecasts, after rising by 2.3% rise in November. 

     Fuel and lubricants prices slumped by 4.4% between November and 

December, the steepest fall since a 6.8% plunge in January of 2015, 

shaving 0.17 percentage points from the change in CPI between November 

and December.  

     Petrol prices declined by 6.4 pence a litre to an average of 121.7 

pence between November and December, after rising by 0.8 pence a litre 

to 119.9 pence in the same period a year earlier. 

     However, core inflation accelerated modestly last month, lifted by 

an increase in the price of hotel rooms in December. Stripping out food 

and energy, annual core consumer inflation rose to 1.9%, above the MNI 

median of 1.8%, up from the 1.8% pace recorded in November. 

     The wedge between headline and underlying inflation decreased to 

0.2 percentage points in November, down from 0.5 percentage points in 

November, the smallest gap since March of last year. 

     Consumer prices rose by 0.2% between November and December, 

matching the November rise and the MNI median forecast. 

     The result fell well short of Bank of England staff forecast of a 

2.4% annual rise in December as reported in the November Quarterly 

Inflation Report. 

     That takes inflation above the Bank's 2.0% target for the 

twenty-second straight month, but Bank staff expect CPI to fall below 

target early this year, according to minutes of the December MPC 

meeting.  However, that forecast could be complicated should sterling 

suffer a sustained selloff in the wake of confusion over the direction 

of Brexit. 

     CPIH, which regained its status as a national statistic last year, 

fell to an annual rate of 2.0% from 2.2% in November and October. 

     Intermediate price inflation also abated, courtesy of a 9.7% fall 

in crude oil prices between November and December. 

     Producer input prices declined by 1.0% in November, for an annual 

gain of 3.7%, the smallest gain since June of 2016, after an 5.3% 

increase in November. 

     Output PPI declined by 0.3% in December, the biggest monthly fall 

since August of 2015, for a 2.5% annual gain, the smallest increase 

since November of 2016. 

     Core output PPI increasecd by 0.2% between November and December, 

pushing the annual rate up to 2.5% from 2.4% in November. 

     Retail price inflation also ebbed significantly, with RPI rising by 

an annual rate of 2.7% in December, the lowest gain since January of 

2017, down from a 3.2% pace in November, well below the MNI median of a 

2.9% increase. 

     Stripping out mortgage interest payments, RPI-X increased by an 

annual rate of 2.7% last month, down from a 3.1% rise in October. 

     Meanwhile, UK house price inflation accelerated modestly in 

November, with the official House Price Index rising by an annual rate 

of 2.8%, up from the revised 2.8% annual pace recorded in October.  

     London housing inflation continued to lag the rest of the country, 

with prices in the capital slipping by 0.7% after falling by a revised 

annual rate of 0.7% in October. London prices have now declined for 

eight of the past nine months, the longest stretch since the fifteen 

months to September of 2009.   

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]