UK consumer price inflation eased more-than-expected in October to its lowest level in three years, due to lower utility costs, thanks to the lowering of the energy price cap.
The consumer price index rose 1.5 percent year-on-year following a 1.7 percent increase in September, figures from the Office for National Statistics showed on Wednesday. Economists had expected the inflation rate to drop to 1.6 percent.
The latest inflation rate was the lowest since November 2016, when it was 1.2 percent.
“A fall in utility prices due to a lowering of the energy price cap helped ease inflation in October,” ONS spokesperson said. “However, this was partially offset by rising clothing prices.”
Gas and electricity prices for households decreased 8.7 percent and 2.2 percent, due to the lowering of the six-month energy cap by the Office of Gas and Electricity Markets, or Ofgem.
Core inflation was unchanged at 1.7 percent in October, as economists expected.
Downward contributions to inflation also came from furniture, household equipment and maintenance, recreation and culture, and food and non-alcoholic beverages.
Clothing and footwear prices made an upward contribution to inflation driven by an increase in prices, mainly for ladies’ formal trousers and branded trainers.
Small upward contributions to inflation came from transport and alcoholic beverages.
The Bank of England’s projections suggest that inflation, which is currently below 2 percent, will decline to around 1.25 percent by the spring next year. Thereafter, inflation is forecast to rise gradually to a little above 2 percent target.
In other data from ONS, output price inflation slowed to 0.8 percent from 1.2 percent in September. Economists had forecast a 0.9 percent increase in factory-gate prices.
Input prices decreased 5.1 percent year-on-year following a 3 percent slump in the previous month. The decline was largely driven by a fall in crude oil prices. Economists had expected input prices to drop 4.6 percent.
House price inflation was 1.3 percent in September, unchanged from August.
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