The pace of inflation has fallen to its lowest stage since March last yr – boosting consumer spending power for struggling retailers inside the run-up to Christmas.
The Office for Nationwide Statistics (ONS) reported CPI inflation falling from 2.4% in October to 2.three% last month – pushed by the biggest month-on-month fall in petrol prices for higher than three years as oil costs tumbled.
Retailers will hope slower tempo of worth rises – coupled with figures last week exhibiting a surge in wage progress to ranges not seen for practically a decade – will help prospects actually really feel further assured about pre-Christmas spending amid warnings about dire shopping for and promoting inside the run-up to Brexit.
CPI inflation drops from 2.4% to 2.3% in Nov. In line with expectations. Main things pulling it down: fuel, recreation/culture prices, esp computer games & downloads, and food/drink, where prices are rising but not as fast as a year ago pic.twitter.com/HnSSZOqZeS
— Ed Conway (@EdConwaySky) December 19, 2018
The ONS figures, however, confirmed few indicators retailers had begun discounting in November as proof grows of a markdown frenzy to drive product sales in additional moderen weeks.
One study this week pointed to “report ranges” of discounting on the end of a dire yr for the sector, which seen woeful consumer confidence combine with bigger costs to set off the collapse of Toys R Us, Maplin and House of Fraser.
The retail tycoon who bought the division retailer chain out of administration, Sports activities actions Direct boss Mike Ashley, has described “the worst November in dwelling memory” for prime avenue retailers.
A income warning from ASOS this week confirmed sturdy on-line performers have been moreover on the mercy of the spending slowdown that has contributed to the need for a string of various most important chains to hunt rescue affords and shut outlets.
The ONS talked about rises in tobacco prices – reflecting Funds obligation will improve – have been the precept upward pressure on inflation last month – with put together and ferry fares moreover contributing.
Supporting the draw again was the autumn hunch in oil prices – pushed by renewed fears of a glut in world offers.
A barrel of Brent crude is at current shopping for and promoting at its lowest stage for over a yr – at $56 – suggesting it will maintain its place as a significant driver of easing inflation this month.
The ONS moreover well-known roles from falling prices for media-playing gear resembling televisions and theatre tickets.
Mike Jakeman, senior PwC economist, well-known: “Setting the aside the implications of dangerous parts resembling fuel, it is clear that inflation is on a downward growth.
“Every headline and core inflation measures have steadily slowed all through 2018, as a result of the impression of a weaker pound has diminished and monetary progress has remained tepid.
“Inflation returning in route of the Monetary establishment of England’s 2% objective is good info for workers, who’re receiving the dual benefit of accelerating wages and slowing inflation, pushing up their income progress in precise phrases.”