UK inflation sags to more than 3-year low

Consumer prices rose at an annual rate of 1.3 percent compared with 1.5 percent in November. (AFP)
Short Url
Updated 15 January 2020

UK inflation sags to more than 3-year low

  • Consumer prices rose at an annual rate of 1.3 percent compared with 1.5 percent in November

LONDON: British inflation sank unexpectedly to a more than three-year low in December as hotels slashed prices, according to figures that are likely to fuel expectations that the Bank of England will cut interest rates.
Consumer prices rose at an annual rate of 1.3 percent compared with 1.5 percent in November, marking the smallest increase since November 2016, the Office for National Statistics said.
That was below all forecasts in a Reuters poll of economists that had pointed to another 1.5 percent increase.
Since the turn of the year, BoE officials have voiced concerns about the strength of Britain’s economy, raising expectations in financial markets that they could vote to cut interest rates as soon as this month.
Although Wednesday’s data showed inflation for the fourth quarter as a whole matched the BoE’s 1.4 percent forecast it made in November, the surprise drop in price pressures last month will likely add to expectations of stimulus.
“Inflation eased in December as prices for hotel stays dropped.
Women’s clothing prices also fell with more items being discounted,” ONS statistician Mike Hardie said.
The ONS said 33 percent of hotels surveyed in December reported falling prices, compared with only 10 percent reporting an increase.
A measure of core inflation, which excludes energy, fuel, alcohol and tobacco, also fell to its lowest since November 2016 at 1.4 percent, down from 1.7 percent in November.


Dubai rents may be bottoming out as ‘green shoots’ appear

Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.