Quantcast
Menu
Save, make, understand money

News

UK CPI inflation rises to 1.3% in year to October

Hannah Smith
Written By:
Hannah Smith
Posted:
Updated:
05/12/2014

UK Consumer Price Index (CPI) inflation rose to 1.3 per cent in the year to October, according to ONS figures released today.

The consumer prices index CPI) increased from 1.2 per cent from the previous month, while the retail prices index (RPI) grew by 2.3 per cent in the year ending October, unchanged from September.

The Office for National Statistics (ONS) noted smaller falls in transport costs than a year ago, especially for motor fuels and air fares. Price rises for computer games were the main contributors to the rise in the rate of inflation.

Food and motor fuel prices, which have historically been upward contributors to the 12-month CPI rate, are currently reducing it by 0.3 percentage points.

Meanwhile, CPIH (a measure of UK consumer price inflation that includes owner occupiers’ housing costs) grew by 1.3 per cent in the year to October 2014, up from 1.2 per cent in September.

The 12-month rate for RPIJ, an additional measure of inflation, stood at 1.7 per centin the year to October, up from 1.6 per cent in the year to September.

Bank of England policymakers expect inflation to fall below 1 per cent over the next six months, according to the latest quarterly Inflation Report.

Governor Mark Carney said it is “likely” he will have to write an open letter to Chancellor George Osborne on account of inflation falling below this level in next six months.

It follows UK CPI inflation falling from 1.5 per cent in August to a five-year low of 1.2 per cent in September, below the 1.4 pr cent analysts had expected.

Acknowledging the near-term outlook for inflation is “materially lower” than expected in the previous report in August, Carney predicted a return to the 2 per cent target by the very end of the forecast period.

Falling commodity prices, the depreciation of sterling and the weakness of the UK’s main trading partners have all affected inflation levels, he said. Economists now believe an interest rate hike is unlikely to happen until later in 2015.