United Kingdom Inflation September 2018

United Kingdom

United Kingdom: Inflation falls back in September

October 17, 2018

Consumer prices rose 0.1% in September over the previous month, down from August’s 0.7% rise. September’s figure was underpinned by higher prices for clothing and footwear; and education, which were partially offset by lower prices for food and non-alcoholic beverages; and transport.

Inflation in September fell to 2.4% from 2.7% in August, moving back towards the Bank of England’s (BoE) 2.0% target and undershooting analysts’ expectations of a decline to 2.6%. Core inflation—which excludes food and energy costs—also decreased. September’s figure suggests that August’s surprise uptick in inflation was simply noise, and not the start of a more sustained upturn in price pressures.

Looking ahead, the general trend for inflation is likely to be downward, as external factors which have generated price pressures in recent months—such as higher fuel prices and sterling weakness—fade. However, rising domestic cost pressures due to limited economic slack will likely slow inflation’s return to the BoE’s target.

UK Inflation Forecast

According to the August Inflation Report, the Bank of England sees inflation dipping to 2.3% in Q4 2018 and 2.2% in Q4 2019. FocusEconomics Consensus Forecast panelists expect inflation to average 2.1% in 2019 and 2.0% in 2020.

Author:, Economist

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United Kingdom Inflation Chart

UnitedKingdom Inflation September 2018

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

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