UK inflation slowed more than expected in September

Rate dragged lower by the cost of food and transport fares, as well as ferry prices

Price growth is expected to drift down toward the 2 per cent target, giving a real-terms boost to households.

Price growth is expected to drift down toward the 2 per cent target, giving a real-terms boost to households.

 

UK inflation slowed more than expected in September, dragged lower by the cost of food and transport fares.

Consumer-price growth dipped to 2.4 per cent from 2.7 per cent in August, the Office for National Statistics said on Wednesday. The rate was lower than the median 2.6 per cent forecast in a Bloomberg survey.

Downward pressure came mainly from food, which fell 0.2 per cent compared with a 0.8 per cent rise a year earlier. There was also pressure from ferry prices, clothing and recreation and culture such as theatre tickets and computer games.

These influences were partly offset by energy prices, with tariff hikes lifting electricity prices by 1.8 per cent compared with no change a year earlier.

Core inflation, which excludes volatile food, energy, tobacco and alcoholic drinks, slowed to 1.9 per cent in September.

Inflation averaged 2.5 per cent in the third quarter, in line with Bank of England forecasts. Officials raised interest rates in August, but no further moves are expected before there is clarity on Brexit.

Price growth is expected to drift down toward the 2 per cent target, giving a real-terms boost to households now enjoying the fastest wage growth in almost a decade.

How quickly it gets there may depend on oil prices, with tensions with Saudi Arabia reviving speculation that Brent crude could soon reach $100 a barrel.

Producer input prices rose 1.3 per cent, taking the annual rate of increase to per cent 10.3. Output prices climbed an annual 3.1 per cent.

House prices rose just 3.2 per cent in the year through August, the weakest pace since 2013. The worst-performing region was London, where values fell 0.2 per cent. – Bloomberg