- September CPI comes in lower than expected at 3.8% for third consecutive month
- Food prices fell 0.2% – the first time they have dropped since May last year
- Core inflation also eased to 3.5%, but goods inflation rose and factory gate price inflation also went up to 3.4%
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK inflation figures:
“Any good news on the inflation front must be seized upon, and the fact food prices actually fell in September is likely to be cause for celebration in struggling households. Staples like vegetables, milk, cheese and bread were all pared back a touch, though such tiny movements won’t make a huge difference to the overall bill when people reach supermarket tills.
“Everyone’s inflation experience is different and month to month changes must be viewed cautiously, especially when we know that farmers have had to deal with a dry and difficult summer. Inflation on goods also ticked up a bit and factory gate prices rose to 3.4%.
“But the impact of those increased labour costs could be beginning to wash through, and inflation is expected to have peaked and should now gradually ease back towards the Bank of England’s 2% target – though that is likely to take a significant amount of time.
“Today’s figures have also potentially given Bank of England rate setters a bit of wiggle room, with market expectations for a further quarter percentage point cut this year lifting even as the value of the pound slid against the euro and the dollar.
“For the chancellor these figures should be gingerly welcomed. It means benefits will likely be uprated next April by slightly less than had been expected and the cost of servicing all that debt will also be impacted by cooler inflation and the potential of further interest rate cuts. But 3.8% is still uncomfortably high after the past few years and inflation has proved incredibly sticky in the UK compared to other G7 countries.”
