- U.K. Inflation Unexpectedly Slows as Carney Prepares to Testify
U.K. inflation unexpectedly slowed in October, driven down by the price of clothing and university tuition fees.
Consumer-price growth was 0.9 percent compared with 1 percent in September, the Office for National Statistics said on Tuesday. The rate was forecast by economists to accelerate to 1.1 percent. Prices rose 0.1 percent on the month, the same as a year earlier.
The figures come as Bank of England Governor Mark Carney prepares to testify to lawmakers about the outlook for inflation. Officials earlier this month dropped plans to cut interest rates again and shifted to a neutral policy stance instead, saying their tolerance for faster price gains is limited. Inflation was as low as 0.3 percent in May.
While inflation is well below their 2 percent target, the sharp fall in the pound since the Brexit vote is expected to drive up prices. The BOE sees it reaching 2.4 percent in the second quarter and remaining above target until the end of the decade.
The ONS said that aside from motor fuel prices, which jumped 2.3 percent in October, there is little evidence that the weaker pound is feeding through to prices in the shops. Clothing prices and tuition fees rose less last month than they did a year earlier.
But the pressure on companies to raise prices is building. The cost of goods leaving factory gates rose by 0.6 percent from September, taking the annual rate to 2.1 percent — the fastest since April 2012.
It came as input prices surged by 4.6 percent, the biggest monthly gain since records began. On the year, prices rose 12.2 percent, with the cost of imported goods and fuel surging 14.1 percent, the most since 2011.
Core inflation — which excludes volatile food and energy prices — slowed to 1.2 percent from 1.5 percent. Inflation including owner-occupier housing, now the ONS’s preferred measure, was unchanged at 1.2 percent.
House-price growth was unchanged at 7.7 percent in September, the ONS said.