Wealth Manager - the site for professional investment managers

Register for full access to Citywire’s Fund Manager database, news and analysis. Registration is free and only takes a minute.

UK inflation falls to 2% target for first time in four years

UK inflation falls to 2% target for first time in four years

The Consumer Prices Index (CPI) grew by 2% in the year to December 2013, the first time it has hit the Bank of England’s target since 2009.

The inflation rate, down from 2.1% in November, is now the lowest it has been since it stood at 1.9% in November 2009.

The largest contributions to the fall in the rate came from prices for food and non-alcoholic beverages and from recreational goods and services, offsetting higher motor fuel prices. The Office of National Statistics said the rise food and non-alcoholic drinks was the smallest since 2006.

The Retail Price Index rose from 2.6% to 2.7%.

The fall in inflation is likely to ease the pressure on Bank of England governor Mark Carney to raise interest rates.

Capital Economics' UK economist Samuel Tombs expects the trend of lower inflation to continue over the next few months.  

Tombs said: 'Energy prices will fall in the spring as utility companies pass on the government’s environmental tax cuts. Last year’s falls in global agricultural commodity prices suggest that food price inflation could ease to close to zero soon. And the recent fall in import prices in response to the stronger pound should begin to be seen in the shops mid-way through this year

He added: 'CPI inflation looks likely to spend more time below the 2% target than above it in 2014, helping real earnings to finally recover and enabling the MPC to leave interest rates on hold this year regardless of the unemployment figures.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Paul Niven: I won't rip up the Foreign & Colonial Trust history book

Paul Niven: I won't rip up the Foreign & Colonial Trust history book

The newly appointed manager of the Foreign & Colonial trust talks about his plans for UK's oldest investment company.

Play Dangerous daisy chains, Black Friday blues and Uber valuations

Dangerous daisy chains, Black Friday blues and Uber valuations

This week’s Investment Pulse looks at the domino effect in European banks, America’s disappointing Black Friday and how much Uber is really worth.

Play Baillie Gifford's Snell bullish on India's prospects following election

Baillie Gifford's Snell bullish on India's prospects following election

Citywire AA-rated manager is seeing good overall growth for the Asia reason but is wary of varying valuations.

Your Business: Cover Star Club

Manchester wealth firm hires Coutts director for London launch

Manchester wealth firm hires Coutts director for London launch

Former Coutts director Tony Robinson has joined Chartered Wealth Management to head the company’s newly opened London office.

Wealth Manager on Twitter