The ongoing slump in oil prices was seen negatively impacting UK inflation once again in the final month of last year. The report, delivered by the Office for National Statistics, showed December headline CPI fell to 2.1%, down from 2.3% prior, in line with expectations, while core CPI actually rose 1.9%.
The decline in headline CPI was mainly due to the drop in petrol prices and airfares, both of which were lower as a consequence of the near 40% slide in oil prices since their 2018 highs. Energy prices contributed -0.14% to the December reading, with petrol prices hitting their lowest level since April 2018.
Hotel Costs Rise
However, the declines in energy were offset by increases in accommodation services, mobile phone charges, games, toys, and food. Specifically, the prices of overnight hotel stays rose 0.9% between November and December, marking a sharp increase from the 3% decline seen over the same period in 2017.
ONS Cites Fall In Oil
Mike Hardie, head of inflation for ONS, said:
“Inflation eased mainly due to a big fall in petrol, with oil prices tumbling in recent months. Airfares also helped push down the rate, with seasonal prices rising less than they did last year. These were partially offset by small rises in hotel prices and mobile phone charges. House price growth was little changed in the year to November with buoyant growth across much of the UK held back by London and the southeast.”
GBPCHF is currently challenging resistance at the 1.2748 level. While above here, focus is on a test of the 1.2924 level where we have confluence between structural resistance (prior swing lows) and the medium term bearish trend line from 2018 highs.