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Inflation expected to fall again UK inflation declines once again
(about 2 hours later)
The latest UK inflation figures are expected to show another sharp drop in the rate for November. UK inflation fell in November to 4.1%, official figures have shown, less of a decline than analysts had expected.
Economics predict that inflation, as measured by the government's preferred Consumer Prices Index, will have fallen from 4.5% in October to 3.9% or less. The drop in the government's preferred Consumer Prices Index rate compares with 4.5% in October. Some economists had tipped a fall to 3.9% in November.
Inflation is falling back from the high of 5.2% reached in September because of lower oil and energy prices. The headline rate of Retail Prices Index inflation, which includes housing costs, declined to 3% in November from 4.2% in October.
Inflation is continuing to fall on the back of lower oil and energy costs.
However, the CPI rate of inflation still remains above the government's target of 2%.However, the CPI rate of inflation still remains above the government's target of 2%.
Deflation risk?
November's inflation as measured by the Retail Prices Index, which also includes housing costs, is also expected to have fallen further in November.
Most economists expect inflation to fall still further into the New Year, with some concerned that not only will it go below the government's 2% target, but that deflation could be possible.Most economists expect inflation to fall still further into the New Year, with some concerned that not only will it go below the government's 2% target, but that deflation could be possible.
This is bad for the economy as it encourages consumers to delay purchases in the expectation that prices will soon be lower, worsening any economic downturn.This is bad for the economy as it encourages consumers to delay purchases in the expectation that prices will soon be lower, worsening any economic downturn.
Last week, Chancellor Alistair Darling told the Treasury Committee that he did not see deflation as being a significant risk.Last week, Chancellor Alistair Darling told the Treasury Committee that he did not see deflation as being a significant risk.