Inflation rate steady as higher energy and petrol offset by cheaper food and clothing

The Consumer Prices Index (CPI) held steady at 2.4 percent in October, defying expectations by economists who predicted a rise to 2.5 percent.

The Office for National Statistics’ (ONS) head of inflation Michael Hardie said: “Prices paid by consumers continued to rise at a steady rate with falls in food and clothing offset by rising utility bills and petrol, as crude prices continued to rise.

“House price growth ticked up a little as increases in Wales, Scotland and the midlands were to some extent offset by falls in central London.”

Food price growth cooled off following rapid inflation this time last year, continuing a trend seen in September.

Overall food and non-alcoholic drink prices declined by 0.2 percent in October, while clothing and footwear dipped by 0.5 percent.

Footwear in particular weighed on the sector with a monthly decline of 1.3 percent.

But there was bad news at the pumps, as consumers’ wallets were hit by higher petrol costs.

Motorists saw petrol soar by 0.4p per litre on the month to 130.7p per litre.

This was the highest level in almost four years, with prices last seen higher in July 2014 when it was at 131p.

Diesel also rose by 1.8p to 136.1p, the highest since May 2014.

Gas and electricity prices both jumped by 2 percent, while liquid fuels jumped by 7.2 percent.

Economists had expected utilities to drive inflation, after price increases last month from utilities firms British Gas and Scottish Power in the latest round of tariff hikes.

But transport services continued a downward trend.

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They dropped 2.6 percent in October as train and ferry tickets fell by 1.4 percent and 8.1 percent respectively.

The Consumer Prices Index including owner-occupiers’ housing costs (CPIH) – the ONS’ preferred measure of inflation – was 2.2 percent in October, unchanged from September.

The Retail Prices Index (RPI), a separate measure of inflation, was 3.3 percent last month, unchanged from September.

JR Zhou, Chief Market Strategist at the online trading platform, Infinox, said: “The inflation data release was a sideshow before it began – a drop in the whitewater Brexit rapids.

“With sterling ebbing and flowing amid the Brexit chatter, the news that CPI hasn’t changed passed almost unnoticed.

“Yet tantalising though the prospect of a Government agreement on a final Brexit proposal is, City pragmatists have concluded that this is far from the beginning of the end.

“At best, it may be the end of the beginning.”


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