Motoring costs fell last month and the price of computer games jumped, leaving U.K. inflation comfortably below the Bank of England’s 2% target.
Consumer-price growth held at a near three-year low of 1.7% in September, the Office for National Statistics said Wednesday. Core inflation accelerated to 1.7% from 1.5% in August.
The lack of headline inflation, combined with clear evidence this week that the labor market is softening, may reinforce the increasingly dovish tilt among Bank of England officials.
The latest signal came from Gertjan Vlieghe, who said Tuesday that further monetary stimulus may be required if Britain fails to reach a deal with the European Union before the Oct. 31 deadline. Even if it succeeds, the case for near-term rate hikes had all-but disappeared given slowing growth in Britain and around the world.
Downward pressure last month came from the price of auto fuel, which fell by 0.7% on the month, second-hand cars and domestic energy bills.
This was offset by recreation and culture costs, with the price of computer games rising as new titles were introduced ahead of the Christmas sales period. There was also upward pressure from furniture, household appliances and overnight hotel stays.
Inflation is expected to dip again this month on cheaper energy after industry regulator Ofgem lowered its price cap. Thereafter everything depends on the outcome of efforts to break the Brexit deadlock.
Source : Bloomberg