Inflation boundaries move Closer to BOE’s 2% Target in U. K.

Inflation boundaries move Closer to BOE’s 2% Target in U. KU. K. inflation surprisingly became sluggish in November moving to the least in the last four years, which is closer to the Bank of England’s (BOE) target of 2 percent.

The Office for National Statistics said today in that London Consumer prices rose 2.1 percent from previous year as compared to 2.2 percent the previous month.

Philip Shaw, chief economist at Investec Securities in London said, “Today’s figures should give reassurance to markets that the period of inflation being way above target is behind us,”. “It makes it slightly easier for the MPC to communicate its policy of keeping rates low. It’s not impossible that the 2 percent could be hit over the next three-to-four months.”

Inflation has been ahead of the BOE’s goal every month since December 2009. The Monetary Policy Committee said last month since the outlook has become better it expects price growth to hit the target within the next year. While wage growth remains downcast, there may be some rising pressure on prices in the coming months as electricity and gas price increases come into effect.

The statistics office said, from the previous month, consumer prices mounted 0.1 percent in November. The decline in the annual inflation rate was partially due to fruit and vegetable prices and base effects from utility-price increases in November 2012.