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UK CPI inflation rises to 1.3%

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  • 18/11/2014
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UK CPI inflation rises to 1.3%
UK Consumer Price Index (CPI )inflation rose to at an annual rate of 1.3% in October, according to ONS figures released today.

The CPI increased from 1.2% from the previous month, while the retail prices index (RPI) grew by 2.3% in the year ending October, unchanged from September.

The Office for National Statistics (ONS) noted smaller falls in transport costs than a year ago, especially for motor fuels and air fares. Price rises for computer games were the main contributors to the rise in the rate of inflation.

Food and motor fuel prices, which have historically been upward contributors to the 12-month CPI rate, are currently reducing it by 0.3 percentage points.

Meanwhile, CPIH, a measure of UK consumer price inflation that includes owner occupier housing costs, grew by 1.3% in the year to October 2014, up from 1.2% in September.

The 12-month rate for RPIJ, an additional measure of inflation, stood at 1.7% in the year to October, up from 1.6% in the year to September.

Bank of England policymakers expect inflation to fall below 1% over the next six months, according to the latest quarterly inflation report.

Governor Mark Carney said it is “likely” he will have to write an open letter to Chancellor George Osborne on account of inflation falling below this level in the next six months.

UK CPI inflation fell from 1.5% in August to a five-year low of 1.2% in September, below the 1.4% analysts had expected.

Acknowledging the near-term outlook for inflation is “materially lower” than expected in the previous report in August, Carney predicted a return to the 2% target by the very end of the forecast period.

Falling commodity prices, the depreciation of sterling and the weakness of the UK’s main trading partners have all affected inflation levels, he said. Economists now believe an interest rate hike is unlikely to happen until later in 2015.

 

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