United Kingdom: Inflation ebbs in October from September
Latest reading: Consumer prices rose 3.6% in annual terms in October, following a 3.8% increase in the previous month. The October reading was in line with market expectations but still well above the Bank of England’s 2.0% target.
Relative to the prior month’s data, price pressures reduced for transportation in October (+3.7% on a year-on-year basis vs +3.9% in September). In contrast, there were higher price pressures for recreation and culture (+2.9% vs +2.7% in September) and food and non-alcoholic beverages (+4.9% vs +4.5% in September).
Meanwhile, core consumer prices were up 3.4% on a year-on-year basis in October, following a 3.5% increase in the previous month.
Lastly, consumer prices rose 0.38% in October on a month-on-month basis, following a flat reading in the prior month.
Panelist insight: On the implications for monetary policy, Nomura analysts said:
“These data continue to support the case for a BoE rate cut next month. There’s plenty more data to go before then, including another round of CPI and labour market reports, two PMIs, and one DMP and GDP report. And of course the all-important budget, where the Chancellor is widely expected to lower VAT on energy to help lower headline inflation.”