UK inflation holds steady at 3%

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Reuters

The UK’s key inflation rate remained steady at a five-and-a-half-year high of 3% in October, according to official figures.

Falls in fuel prices were offset by higher food costs, in particular those for potato crisps, the Office for National Statistics (ONS) said.

The Consumer Prices Index (CPI) had been expected to rise, with the Bank of England forecasting it would peak at 3.2% this autumn.

The government’s target for CPI is 2%.

If the CPI inflation rate had risen above 3%, Bank of England governor Mark Carney would have had to write to the chancellor explaining why it was so far above target.

The ONS said the inflation rate for food and non-alcoholic drinks was 4.1% last month, its highest since September 2013.

However, this was offset by the falling cost of motor fuel and lower furniture prices.

The fall in the value of the pound since last year’s Brexit referendum has contributed to the recent pick-up in inflation, as it has increased the cost of imported goods and services.

However, Chris Williamson, chief business economist at IHS Markit, said the latest inflation figures “will add to the sense that the worst of this impact has already passed”.

“Data on company costs, which tend to change ahead of changes in consumer prices, are already shown signs of having peaked earlier in the year,” he added.

Earlier this month, the boss of Sainsbury’s told the BBC that the UK was “probably through the worst” of the impact of the weaker pound on food inflation.

October’s Retail Prices Index (RPI), a separate measure of inflation, was 4%, up from 3.9% in September.

Source

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