Inflation was weaker than expected in December

Tumbling energy costs dragged down inflation in December.

The consumer price index (CPI) fell 0.1%, missing expectations for a flat reading.

Compared to the previous year, CPI rose 0.7% (0.2% expected).

Excluding volatile food and energy costs, so-called core CPI rose 0.1% month-on-month and 2.1% year-on-year, the strongest gain since mid-2012 according to Renaissance Macro’s Neil Dutta.

Compared to December 2014, the consensus forecast had called for a 0.8% increase on the headline, and 2.1% on a core basis.

Housing costs continued to increase, as primary rents rose 3.68%, and owners’ equivalent rent (monthly rent excluding utilities) increased 3.14%.

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