UK inflation slowed more-than-expected in November due to falling clothing prices, data published by the Office for National Statistics showed on Wednesday.
Consumer price inflation weakened to a three-month low of 0.3 percent from 0.7 percent in October. The rate was well below the economists’ forecast of 0.6 percent and the central bank’s 2 percent target.
“The price fall in November this year reflects increased discounting and there have been media reports that some Black Friday sales may have spread further across the month,” the ONS said.
Clothing and footwear prices decreased 3.6 percent annually and food and non-alcoholic beverages prices slid 0.6 percent. These were partially offset by upward contributions from games, toys and hobbies, and accommodation services.
At the November meeting, the Bank of England said inflation is expected to remain at, or just above 0.5 percent during most of the winter, before rising quite sharply towards the 2 percent target as the effects of lower energy prices and value added tax dissipate.
The BoE is set to announce its next monetary policy decision on December 17.
November’s drop in inflation will not prompt the monetary policy committee to announce any further policy stimulus tomorrow, Ruth Gregory, an economist at Capital Economics, said. The bank is unlikely to take any action for some time to come, unless there is a no deal Brexit.
“In that case, we think the MPC would look through the temporary rise in inflation and instead focus on quashing any financial market dislocation and supporting demand,” the economist added.
On a monthly basis, consumer prices dropped 0.1 percent in November after staying flat a month ago. This was the first fall in three months and in contrast to a 0.1 percent rise economists’ had forecast.
Excluding energy, food, alcoholic beverages and tobacco, core inflation eased more-than-expected to 1.1 percent from 1.5 percent in October. The expected rate was 1.4 percent.
Another report from the ONS showed that output prices decreased for the ninth consecutive month in November. Nonetheless, the rate of decline slowed to 0.8 percent from 1.4 percent. Prices were forecast to drop 0.9 percent.
Month-on-month, output prices gained 0.2 percent, following a flat growth in October.
At the same time, input prices grew 0.2 percent on month in November, compared to a 0.4 percent rise in October.
The annual fall in input prices slowed to 0.5 percent from 1.2 percent. Economists had forecast an annual 2.5 percent decline.