Inflation rate falls to 0.9% in October

Ryan Bembridge

November 15, 2016

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The UK inflation rate surprisingly fell from 1% in September to 0.9% in October, the Consumer Prices Index from the Office for National Statistics has revealed.

The ONS said the main downward contributors were the cost of clothing and university tuition fees, which rose by less than a year ago.

The Bank of England’s Monetary Policy Committee had predicted inflation rising to 1.1% in its November Inflation Report.

Knight Frank: Expected subdued prices in 2017

Scott Bowman, economist at Capital Economics, reckoned the fall represents a blip rather than a trend.

He said: “The fall in inflation in October was a temporary stumble along the upward path that should see inflation breach its 2% target in 2017.

“We think inflation will peak at about 3.2% in the first half of 2018 and stay above the 2% target for a further year or two.

“This rise in inflation will eat into households’ real incomes and probably lead to a slowdown in consumer spending growth.

“However, support from low interest rates, and a probable easing of the fiscal squeeze in next week’s Autumn Statement, should ensure that spending growth doesn’t slow too sharply.”

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