UK: Core CPI unchanged at 1.9% in October - ING
|James Smith, Developed Markets Economist at ING, points out that the UK’s core CPI remained unchanged at 1.9% in October, although interestingly this is being propped up to some extent by higher recreation prices.
Key Quotes
“Admittedly, this is a category that contains some quite volatile items, but it also encompasses various goods that are fairly sensitive to fluctuations in the value of the pound - things like computers and TVs.”
“Now that the post-Brexit sterling decline is more-or-less reflected in prices, the rate of inflation for these goods should really be falling a bit faster. If we see a bit of a correction over the next 2-3 months, we could see core inflation dip a little lower to around 1.7%.”
“It's a similar story for the headline rate of inflation.”
“The noticeable rise in petrol prices since March has kept headline CPI sticky around 2.4%, despite a further 0.2% fall in food prices between September and October. However, as base effects kick-in, we'd expect CPI to trend back to 2% by the second quarter of next year.”
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