Inflation is actually within touching distance of the Bank of England’s (BoE) recommended 2% target, as the Consumer Prices Index (CPI) fell to 2.1% across December. Lower oil prices cut the cost of fuel and airfares that led to the fall in CPI, which is now at its lowest level in two years.
As I am sure you all know, the CPI measures a theoretical basket of consumer goods, basically measuring how expensive things are to the consumer, AKA you!
Forecasts predict that inflation may fall below the Bank of England target of 2% over 2019, a reflection of the general outlook for the economy. The Bank of England is unlikely to change its monetary policy until after decisions have been made about Brexit and so this fall in the Cost Price Index will not change the target levels of inflation for now.
Lower inflation is good news for consumers’ pockets, but it does raise questions about the stability of the economy in general and it will be interesting to see how this changes as the economy stabilises after Brexit is finalised.
