The UK’s inflation rate has surprised experts by falling in October.
Experts were expecting a modest increase in inflation which has been following an upward trend recently. The surprising news comes amid widespread warnings that the UK is heading for a major jump in prices thanks to the falling pound and Brexit.
So why did inflation just fall?
The simple answer is that prices in the shops did not rise year-on-year in October as rapidly as they did in September. That’s why the rate of Consumer Price Inflation eased to 0.9 per cent, from 1 per cent previously. The Office for National Statistics (ONS) says the main downward contributor to the shift were clothing and university tuition fees. Other factors were falling prices for some games, toys and, non-alcoholic drinks.
The ONS predicts that this reduction in inflation is a short term blip and that higher inflation is on the way. Some forecasts have predicted inflation will rise as high as 4%
This is mainly because analysts expect the collapse of sterling since 23 June – it is down by more than 15 per cent against the dollar – to feed through into higher prices in the shops.