Figures from the Office for National Statistics (ONS) show the Consumer Price Index measure of inflation stalled in October after dipping in September from a six-month high of 2.7% in August.
Wage growth excluding bonuses inched up to 3.2%, its highest level since 2008, outstripping inflation by 0.8%, and experts expect inflation to slow further entering 2019.
“Inflation is likely to continue to slow in the coming months, reflecting a broader cooling of the economy since the summer, a stumbling housing market in London and the effects of the Bank of England’s interest rate increase in August,” said Mike Jakeman, senior economist at PwC.
“We expect inflation to slow to the central bank’s 2% target, and, for as long as this trend persists, would rule out another rate hike in the short term.”
Hargreaves Lansdown senior analyst Laith Khalaf added: “Inflation is still above target, but tolerably so for the moment.”
“The effect of weaker sterling has faded, but rising fuel and energy prices have taken up the baton in keeping inflation elevated.”
However, Brexit remains “the elephant in the room” when it comes to the future path of inflation, according to Khalaf.
“The pound now waxes and wanes with the Brexit negotiations, and that has a big impact on how much UK consumers pay for imported goods,” he said.
“A disorderly Brexit would see the pound fall and inflation rise, and if you believe Bank of England governor Mark Carney, that could mean a rate hike or a cut.
“Meanwhile what the market sees as a positive Brexit deal will deliver a higher pound and lower inflation, and would most likely embolden the Bank of England to raise rates more aggressively.”