- CPI fell to 3.6% in the year to October – although not by as much as had been expected
- The hike in the energy price cap wasn’t as great as that of 12 months ago
- Food price inflation increased to 4.9%, with staples like cereals, meat and veg all edging up
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK inflation data:
“The biggest problem with this latest fall in headline inflation is that households are still paying more, with the reason for the drop to 3.6% primarily down to a quirk with energy prices. Although the energy price cap has gone up, it’s not gone up by as much as it did last year.
“That’ll be cold comfort for families paying more for their gas and electricity who will also be finding that food prices have been ticking back up, as staples like bread, meat and potatoes all cost more than they did even a month ago.
“Today’s data could have a silver lining, with market expectation that the Bank of England will deliver an interest rate cut before Christmas edging up, although there is of course a rather large elephant taking up most of the space in the room.
“If Rachel Reeves’ upcoming Budget includes policies which could be seen as inflationary, then those rate setters might decide they need to take a bit more time to see exactly how the economy deals with the chancellor’s measures. It’s also notable that the ONS points to a rise in factory gate prices, as many producers as well as retailers seek to offset costs from government measures such as the increase to employer National Insurance payments delivered in the last Budget.
“A fall in inflation for the first time since March is good news but at what is the most expensive time of year for many families, it might not feel like it. With consumer confidence shaken by the last few months of pre-Budget pitch rolling, next week’s set piece fiscal event needs to deliver more than just savings for the Treasury.”
