Inflation up 1.3pc

Robyn Hall

November 18, 2014

Unusually food and motor fuel costs pulled the CPI rate down, while the main contributor to rising inflation was the cost of computer games.

The cost of transport has fallen, yet this reduction was at a smaller rate than a year ago.

Samuel Tombs, senior UK economist, said: “The increase in CPI inflation from 1.2% in September to 1.3%, the first rise since June, largely reflected a slight easing of the rate of fuel price deflation, which is very likely to be temporary.

“It is unlikely that the current inflation rate fully reflects the impact of the recent fall in import prices or domestic producer prices – down 0.5% in the year to October.

“As a result, CPI inflation is still on course for a sub-1% rate soon that would require Mark Carney to reach for his letter-writing pen, and looks set to remain well below the 2% target throughout 2015.

“As such, low inflation will provide further support to households’ real incomes at a time when other sources of support for the economic recovery are fading and should enable the MPC to raise interest rates only gradually over the next couple of years.”

Chris Williams, chief executive of Wealth Horizon, added: “This increase was driven primarily by a smaller decline in the price of oil than the same time last year, as well as an increase in the cost of certain goods.

“While well below the Bank of England’s 2% inflation target, the figure remains higher than many of the rates available from banks.

“Consumers need to look at how they can protect their savings from inflation, especially if this is the start of a trend upwards for prices.”

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