United Kingdom: Inflation remains at a multi-year high in October
November 14, 2017
Consumer prices rose 0.1% in October over the previous month, down from September’s 0.3% rise. October’s figure was largely driven by higher prices for food and non-alcoholic beverages, education and recreation and culture.
Inflation in October remained at the prior month’s multi-year high of 3.0%. However, the reading undershot analysts’ expectations, and belied the Bank of England’s prediction at its November meeting that inflation would exceed 3.0%. As a result, Bank of England Governor Mark Carney will be spared for the time being from writing a letter to the Chancellor to explain the deviation from the Bank’s target. Annual average inflation increased from 2.2% in September to 2.4% in October.
It is too early to determine whether inflation has reached a peak, or if it still has further to rise as the weaker pound filters through to prices. However, markets interpreted October’s figure as a sign of potentially slower monetary tightening going forward, with the pound losing value soon after the announcement.
Author: Oliver Reynolds, Economist