CPI drops to 15-year low

CPI drops to 15-year low

You can find the full release from the ONS here. I make it the first time that the rate of CPI inflation has ever halved in a single month. Though admittedly it’s down from not much to not much at all.

Expect it to fall in the coming months, possibly going into negative territory (for the first time in CPI’s history) in the coming months.

Here’s an interactive graph of CPI going back all the way to its origins (in 1989):

The main contributors to the fall in recent months have been petrol prices which, according to the ONS, have fallen in price (per litre) has fallen from 141.6p and 147.7p per litre for petrol and diesel respectively in April 2012 to to 116.8p and 122.9p in December.

However, the biggest downward factor in December itself were energy and gas bills. They were frozen this year, compared with big increases normally this time of year. These so-called “base effects” pushed down housing costs considerably.