Q4 Inflation Edges Up Slightly

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Q4 '15 Inflation: 0.1%

Average Prediction: 0.1%

Number of Correct Forecasts: 113/558

Highest Oil Price: $37 (5th Jan)

Competition Progress: 7.7% complete

The average rate of inflation in the fourth quarter of 2015 was 0.1%, as the official inflation rate edged up in December to 0.2% (from 0.1% in November, and -0.1% in October). This slight increase comes after two consecutive quarters of 0% average inflation, and December was the first month since January 2015 with an inflation rate of above 0.1%.  However, 0.2% is still close enough to zero to be negligible, making 2015 the year of "no-flation".

This year, our forecasters were prepared for such low rates, with around 20% of all 558 entries correctly predicting a rate of 0.1%.  Roughly half of all forecasts were for the rate to be below 0.1% (0% was the most common prediction, even though the mean average forecast was spot on at 0.1%), while 30% thought it might be higher.  The average forecast is for inflation to increase gently through the year, reaching 0.7% by the end of the third quarter.  Although this would make 2016 a year of higher inflation than 2015, it would still be historically very low, and it is worth bearing in mind that these forecasts were made before the oil price dropped below $30 per barrel!

In the official Titans' competition, LSE's Rain Newton-Smith took an early lead as she forecast a rate of 0.2%, compared to Jonathan Portes' and Sean Holly's forecasts of -0.1%.  Needless to say, it is still far too early in the competition to draw any conclusions.  However, it is worth noting that Rain Newton-Smith's forecasts for the rest of the year are much higher than the average band.

The next competition update comes next week, on 28th January, when we find out the preliminary estimate for Q4 GDP growth.  The public average forecast was for 0.6%, while our Titans were slightly more optimistic, with their forecasts ranging between 0.6% and 0.9%. 

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