UK Inflation Accelerates In September

UK consumer price inflation accelerated in September as the end of the government’s food discount scheme boosted restaurant and café prices, official data showed Wednesday.

Inflation rose to 0.5 percent from a near five-year low of 0.2 percent in August, the Office for National Statistics reported. The rate came in line with expectations.

Nonetheless, inflation was far below the central bank’s target of 2 percent.

Transport costs, and restaurant and café prices, following the end of the Eat Out to Help Out scheme, made the largest upward contributions.

Month-on-month, consumer prices advanced 0.4 percent, offsetting a 0.4 percent fall in the previous month. Prices were forecast to gain 0.5 percent.

Excluding energy, food, alcoholic beverages and tobacco, core inflation increased to 1.3 percent from 0.9 percent a month ago.

With inflation just 0.5 percent in September and new Covid-19 restrictions darkening the economic outlook again, it is hard to think of reasons why the Bank of England won’t launch another GBP 100 billion or so of quantitative easing at the policy meeting on November 5, said Paul Dales, an economist at Capital Economics, said.

BoE policymaker Gertjan Vlieghe on Tuesday said the outlook for monetary policy is skewed towards adding further stimulus.

Another report from the ONS showed that output prices continued to fall in September. Factory gate prices declined 0.9 percent on a yearly basis, the same rate as seen in the past three months and matched expectations.

The largest downward contributor to the annual output inflation was petroleum product prices.

Output prices dropped 0.1 percent on month, offsetting a 0.1 percent rise in August.

The ONS said the annual rate of input inflation continued to display negative growth for the eighth consecutive month. Input prices slid 3.7 percent from last year, but slower than the 5.6 percent fall a month ago. Economists had forecast an annual decrease of 5.5 percent.

On month, input prices grew 1.1 percent, in contrast to a 0.2 percent drop in August.

In a separate communiqué, the ONS said house price inflation accelerated in August.

House prices grew at a faster pace of 2.5 percent year-on-year after rising 2.1 percent in July. Average house price was GBP 239,000 in August.

Source: Read Full Article