United Kingdom Inflation

United Kingdom

Inflation eases in October

In October, consumer prices rose 0.1% over the previous month, well below the 0.6% increase recorded in September. Most of the upward pressure came from rising costs of clothing, as well as utility bills. Annual headline inflation moderated from 5.2% in September to 5.0% in October. Market analysts had expected inflation to ease to 5.1%. Inflation in the U.K. remains relatively high by historical standards and is well above the Bank of England's target of 2.0%. According to the Bank of England, however, the elevated inflation rate mainly stems from higher global commodity prices and January's VAT rate hike, and should gradually dissipate in 2012. According to its November Inflation Report, the Bank of England expects inflation to average 4.5% this year before moderating to 2.6% in 2012.


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