United Kingdom: Inflation comes in at highest level since April in October
Latest reading: Inflation came in at 2.3% in October, up from September’s 1.7%. October’s reading marked the highest inflation rate since April and was slightly above market expectations. Looking at the details of the release, prices for transportation dropped at a more moderate pace while housing and utilities price pressures rebounded; the latter reflected the increase in regulated electricity prices from October.
Annual average inflation fell to 2.8% in October (September: 2.9%). Meanwhile, core inflation ticked up to 3.3% in October from September’s 3.2%.
Finally, consumer prices increased 0.60% over the previous month in October, swinging from the 0.03% drop logged in September. October’s uptick marked the sharpest increase in prices since May 2023.
Panelist insight: On the implications for monetary policy, Goldman Sachs analysts said:
“Services inflation rose to 5.02% in October, slightly ahead of our own […] and the BoE’s projection. […] That said, the upside surprise in services inflation relative to our numbers largely stemmed from volatile components and education prices, and underlying services inflation measures that exclude these components decelerated notably on a year-on-year basis. We continue to expect the MPC to hold in December and cut at a quarterly pace in 2025.”