UK inflation unexpectedly slowed in October, as the main reason is the weaker growth in prices of clothing and university fees. The growth in consumer prices decreased from 1.0% yoy in September to 0.9% in October, according to the National Statistical Office. The expectations of the economists were for an acceleration to 1.1%. On a monthly basis, inflation is 0.1%.
The data come just before a speech of Governor of Bank of England, Mark Carney, who must testify before parliament on prospects for inflation and economic growth.
Last month, the Bank of England refrained from further interest-rate cuts and the representatives of the regulator said that “the stated tolerance for higher inflation has its limits”.
Although inflation is below the target level of 2%, the sharp depreciation of the pound is expected to accelerate the growth of prices. According to the BoE, the inflation will reach 2.4% in the second quarter and will remain above 2% until the end of the decade.
Data from the Statistical Office show that in October transport fuels have risen by 2.3%, but other than that no other evidence that the weak pound has led to higher prices.
Increases the pressure on companies to raise prices. Manufacturing inflation in October was 0.6% on a monthly basis and on annually was 2.1%, which is the sharpest increase since April 2012.
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