Is Britain's "Era of Deflation" Over?

Economists expect inflation to pick up in Britain in 2017. Why? The explanation is that a drop in the value of the pound will result in higher prices for imports. Observers of Britain's economy also point to a slowdown in the rate of food deflation. Even though shop prices declined for a 43rd straight month in November, food prices fell by 0.8% vs. a 1.2% annual drop in October. A Dec. 5 Telegraph article offers additional specifics:
Fresh food, which is less likely to have been bought then stored at pre-referendum exchange rates, fell in price by 1.2pc; the previous month’s drop was 2pc. The price of non-food goods fell by 2.3pc, an acceleration on the 2.1pc drop seen in the 12 months to October, but that may also be a short-term change. Discounts and promotions offered in the ever-expanding run up to Black Friday, a US sale which has been adopted in the UK, may have offered a temporary reprieve before prices start to rise, the BRC said. “Shop prices are still falling and deflation will continue to at least the end of the year, as the result of the battle for the wallet of Christmas shoppers,” said [a representative] from Nielsen, which compiles the figures alongside the BRC. “Looking ahead, we can expect a slow return to shop price inflation during 2017 with fresh foods, some of which are also seasonal and weather dependent, likely to be impacted sooner when increased supply chain costs finally begin to filter through to retail prices.
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