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United Kingdom Inflation September 2023

United Kingdom: Inflation holds steady in September

Inflation came in at 6.7% in September, unchanged from August’s reading. September’s reading marked the joint-lowest inflation rate since February 2022, but was still more than triple the Bank of England’s 2.0% target and was above market expectations of 6.6%. Softer food price inflation was largely offset by a rebound in transport prices and faster growth in education and hospitality prices.

Annual average inflation fell to 9.0% in September (August: 9.3%). Meanwhile, core inflation edged down to 6.1% in September, from the previous month’s 6.2%.

Finally, consumer prices rose 0.50% over the previous month in September, picking up from the 0.34% increase recorded in August. September’s figure marked the highest reading since May.

On the latest reading and implications for monetary policy, Nomura analysts said: “The upside surprise to consensus today was both modest and should be seen in the context of the previous month’s significant downside surprise. Eyeballing our measure of excess core price growth, there is little evidence to suggest that today’s figures have necessarily disturbed the downward trend in price momentum. […] we haven’t changed our central bank forecasts on the back of today’s figures, and think the Bank of England will have little reason to conclude that the trend towards slowing price momentum doesn’t remain in place. We look for no further rate hikes.”

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