United Kingdom Inflation October 2016

United Kingdom

United Kingdom: Inflation slides in October

In October, consumer prices increased 0.1% from the previous month, which came in slightly below the 0.2% rise seen the previous month. October’s increase reflected higher prices for alcohol and tobacco as well as for housing and household services. On the other hand, prices fell for clothing, footwear and transport.

Inflation was 0.9% in October, down from September’s 1.0%, which had marked the highest reading since October 2014. The reading came in below the 1.1% expected by the markets. Finally, annual average inflation inched up from 0.4% in September to 0.5% in October, the highest figure in over a year.

In August, the Bank of England cut its Base Rate for the first time since March 2009 in order to safeguard the economy and offset some of the negative effects of the Brexit vote. The move will also put upward pressure on inflation. The BoE sees inflation averaging 1.3% in Q4 2016 and 2.1% in Q4 2017. FocusEconomics Consensus Forecast panelists expect inflation to average 0.7% in 2016, which is unchanged from last month’s forecast. For 2017, the panel forecasts that inflation will average 2.3%, which is also unchanged from last month’s estimate.


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United Kingdom Inflation Chart


United Kingdom Inflation October 2016

Note: Annual and monthly variation of consumer price index in %.
Source: Office for National Statistics (ONS) and FocusEconomics calculations.


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