Inflation edges out of negative territory in November

The rise takes inflation into positive territory for the first time since July
The rise takes inflation into positive territory for the first time since July

Inflation edged out of negative territory last month, but official figures showed that mild weather drove a record fall in clothing and footwear prices amid widespread discounting on the high street.

The Office for National Statistics (ONS) said the rate of Consumer Prices Index (CPI) inflation rose to 0.1% in November, ending two months in a row of mild deflation.

This came as falls in the prices of transport, alcoholic drinks and tobacco were smaller than a year earlier.

The rise in inflation took CPI into positive territory for the first time since July, but CPI has now remained at or close to zero for 10 months in a row in the longest run of flat or falling prices since records began.

Shoppers benefited from heavy discounting of clothes and footwear after a relatively warm autumn saw retailers slash price tags to shift stock of winter items, the data suggested.

Prices of clothing and footwear fell by 0.1% between October and November - the first time they have dropped month on month in November since ONS records started in 1996.

But the ONS said the drop also followed a hefty increase in clothing prices between September and October.

Philip Gooding, head of CPI at the ONS, said: “Although the prices of many items continue to fall, because they are falling at a slower rate than at the same time last year, the overall effect is a slight rise in headline CPI.”

The figures show petrol prices continued to slide in the month, down 1.5 pence a litre, although this was less than the 3p a litre drop seen a year earlier.

A range of supermarkets last week cut the petrol price below £1 a litre, the lowest UK price level, excluding special promotions, since 2009. Oil prices have fallen to near seven-year lows, plunging again yesterday due to over-supply and weak demand as the global economy slows.

Minutes of the Bank of England’s rates decision last week showed policymakers believe falling oil costs could see inflation remain lower for longer, which may further push back any rise in UK interest rates.

The Bank held rates at 0.5% this month once again, with the cost of borrowing having remained unchanged now for more than six years. But its decision came as the US Federal Reserve is poised later this week to make its first interest rate increase in nearly a decade, while monetary policy in Europe is moving in the opposite direction.

The ONS inflation data also showed that the Retail Prices Index (RPI) - a separate measure of inflation that includes housing costs - rose to 1.1% in November, up from 0.7% in October. This marked the largest month-on-month change in the annual rate for more than three years.