UK inflation data for October

Flickr/Bart
Heird

• I
  nflation in the UK unexpectedly drops
  in September, as food price increases slow down.
• Consumer price inflation (CPI), the most watched
  measure of UK inflation, feel to 2.4%, down from 2.7% in the
  previous month.
• The fall is coupled with a rise in average wages for UK
  workers, which grew by 3.1% in the 12 months to September, the
  fastest increase since the financial crisis.

The rate of inflation in the UK dropped sharply and somewhat
unexpectedly in September, signalling that the surprise rise in
prices last month was just a temporary blip in a longer downward
trend for inflation in Britain.

The Office for National Statistics (ONS) said
 on
Wednesday that consumer price inflation (CPI), the most watched
measure of UK inflation, feel to 2.4% in September, down from
2.7% in the previous month. CPI had been expected by economists
polled prior to the release to drop to 2.6% during the
month.

CPIH, the ONS’ preferred method of measuring inflation
was also lower in September, falling from 2.4% in August to
2.2%.

“Food was the main downward pull on inflation as last
year’s September price rises failed to reappear, while ferry
prices dropped after their surprisingly high summer peak,” Mike
Hardie, the ONS’ head of inflation said in a statement.
“
However, it wasn’t all one-way traffic with energy
suppliers pushing up their prices.”

Here’s the chart from the ONS of inflation as part of the
longer term trend:

ONS

Inflation in the UK had been subdued for several years
prior to the vote to leave the EU in June 2016. But the vote
caused a fall in the value of the pound, which pushed up
inflation.

As the pound has recovered, inflation once again started to
fall, dropping from 3% at the end of 2017 to 2.4% in June.
It then picked up again in July and August, but now appears
to be moving lower once again, signalling that the inflationary
impacts of the pound’s fall may be going away.

Wednesday’s data comes just 24 hours after wage figures
from the ONS showed pay for UK workers rising by 3.1% in the 12
months to September, the fastest rate of growth since the
financial crisis.

“Coupled with the gradual up-tick in wages, the slowing
rise in prices will deliver a boost to consumers’ real take-home
pay packets, which will also be welcome news for retailers,” Tej
Parikh, a senior economist at lobby group the Institute of
Directors said.