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The UK Consumer Prices Index (CPI) 12-month rate was 2.4% in October 2018, unchanged from September 2018, according to the Office of National Statistics (ONS).
The large downward contributions to the CPI included food and non-alcoholic beverages, clothing and footwear, and some transport elements, which were offset by rising fuel costs, the ONS explained.
Other smaller upward contributions came from miscellaneous goods and services, recreation and culture, and communication sectors.
Other upward contributions came from housing and household services, principally from domestic utilities, with electricity prices up around 9% and gas prices increasing by 7.6% in the 12 months to October 2018.
Inflationary pressures subsiding
The National Institute of Economic and Social Research (NIESR) after analysing 135,000 goods and services in the CPI basket found evidence that inflationary pressures were subsiding.
‘While there were fewer items sold at sales prices, there were more permanent price decreases and less price increases compared to previous years,’ Senior Economist at the NIESR Jason Lennard said.
‘This weakness is widespread, as underlying inflation fell in every region of the country except for Yorkshire and the Humber,’ he added.
BoE to reach 2% target
Inflation is likely to continue to slow over the coming months reflecting a broader cooling of the economy since the summer, a stumbling housing market in London and the effects of the Bank of England's interest rate increase in August, according to Mike Jakeman, Senior Economist at PwC.
‘We expect inflation to slow to the central bank's 2% target, and, for as long as this trend persists, would rule out another rate hike in the short term,’ he said.
‘The combination of slowing inflation and accelerating nominal wage growth is a favourable one for workers, who will see their buying power improve in the remainder of this year and in 2019.’
‘The effect on the economy depends on whether workers choose to spend or save this income; saving rates have been at record lows in recent years and some households have been using savings to pay for everyday expenses,’ he added.