LONDON: Cheaper petrol and video games helped push Britain’s inflation rate to its lowest since early 2017 last month, official data showed on Wednesday, offering some relief to consumers who have recently reined in spending.
Consumer prices rose at an annual rate of 2.3 percent in November, the lowest since March 2017, in line with a Reuters poll of economists and down from 2.4 percent in October.
However, there was less cheerful news for British homeowners, with the average price of a house rising at its slowest rate since July 2013, up 2.7 percent on the year.
House prices in London have declined on the year for seven of the last eight months — the longest run of falls since the last recession — as the country’s capital feels the effect of higher purchase taxes and investor uncertainty ahead of Brexit.
The biggest monthly fall in petrol prices in more than three years was the biggest driver of slower consumer price inflation, reflecting a sharp fall in the cost of a barrel of oil. A drop in volatile video games prices also pushed down on inflation, but this was more than offset by higher tobacco taxes.
British consumers have been pressured by inflation since June 2016’s Brexit referendum triggered a fall in sterling of more than 10 percent against the dollar and euro. A year ago, inflation peaked at a five-year high of 3.1 percent.
But despite the fall in inflation since, and a pick-up in headline wage growth to its highest in a decade, businesses have reported a downturn in consumer spending in recent months.
The British Chambers of Commerce forecast on Tuesday that economic growth this year and next would be the slowest since the country was last in recession in 2009.
If Britain leaves the European Union as scheduled on March 29, without securing any transition deal to preserve trade ties, the outcome could be significantly worse, economists say.
Earlier this month the Bank of England sketched out a worst-case no-deal Brexit scenario in which sterling would plunge to parity against the US dollar, inflation would exceed 6 percent and the economy contract by 8 percent.
The ONS figures also pointed to a continued easing in short-term consumer prices pressures.
Among manufacturers, the cost of raw materials – many of them imported – was 5.6 percent higher than in November 2017, down sharply from 10.3 percent in October as crude oil prices recorded their biggest monthly drop since the start of 2016. Economists polled by Reuters had expected input prices to rise by 4.6 percent.
Manufacturers increased the prices they charged by 3.1 percent compared with 3.3 percent in October, slightly faster than economists had forecast.