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Oil Prices Drop 40% Year on Year

13th November 2008 | back to article listings BACK    print this article PRINT

Oil prices continue to drop and there is now a 40% year-on-year price fall with oil prices in the $53 to $59 price range.

Pump prices also seem to be falling dramatically with several examples of filling stations showing a 25% fall from their highest prices a few months ago and still falling fast.

The effect of this upon CPI inflation will be significant and with all of the other factors contributing to the inflation calculation we still expect to see negative inflation in 2009 at some point which will go some way towards compensating for wages not going up very much for the next year. The retail price inflation figure is certain to go below zero by the spring in our opinion.

All of this justifies historically low interest rates for a period of time and we expect to see UK base rates at under 3% until the end of 2009.

It will be important for property investors and homeowners alike to switch into fixed rates at the point at which sentiment on inflation is at its worst. By this I mean when press comment is at its peak in terms of talking about deflation as this will be when expectations of future interest rates being low are at their maximum. This will feed through into interest rate swap pricing and will give you the lowest fixed rates. Expect this to be sometime around the middle of next year.



This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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