Inflation at joint lowest on record

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Q4 '14 Inflation: 0.9%

Average Prediction: 1.2%

Number of Correct Forecasts: 40/462

Weakest Yen to Dollar Rate: 121 (5th Jan)

Competition Progress: 7.4% complete

The CPI measure of inflation grew by only 0.5% in December 2014, the joint lowest level on record, driven down mostly by a continuing reduction in oil and food prices.  Combined with a rate of 1.3% in October and 1.0% in November, this meant that the quarterly average was 0.9% (also the lowest since Q2 2002).

The average forecast in our competition was higher than the outcome, at 1.2%, and this generally reflected the consensus that although inflation was expected to fall compared to last quarter, the most recent 0.5% rate has come as a surprise to most.  However, 40 people in our competition were exactly right with a forecast of 0.9%, and over a quarter of entries predicted a rate of 0.8% to 1.0%.

In the official competition, all three titans were close, with Michael McMahon and Kate Barker both predicting a rate of 1.1% and John Llewellyn going for 1.2%.  Michael (representing LSE) has taken the initial lead due to his superior tie-breaker score, but since this is only the first serious competition update, there is of course plenty of time for everything to change.

Click here for a summary of the results so far, or here for the full standings.