"Amidst all the talk of ‘Trumpflation’ across the pond, the UK’s inflation rate has confounded expectations by falling in October."
Economists had expected a small uptick from 1.0% to 1.1% - a continuation of the recent upward trend. The main downward contributors were clothing prices and university tuition fees, both of which rose by less than a year ago. Sterling fell sharply on the news, losing around half a cent against the US dollar, according to Hargreaves Lansdown.
ONS says that although the rate was slightly lower than in September 2016, it remained higher than the rates otherwise seen since late 2014.
Downward pressures were offset by rising prices for motor fuels, and by prices for furniture and furnishings, which fell by less than they did a year ago.
CPIH rose by 1.2% in the year to October 2016, unchanged from September.
Ben Brettell, Senior Economist at Hargreaves Lansdown, commented: "Amidst all the talk of ‘Trumpflation’ across the pond, the UK’s inflation rate has confounded expectations by falling in October.
"Today’s surprise fall looks like a blip, as sterling weakness continues to raise the cost of inputs for UK businesses. The cost of raw materials and fuels bought by UK companies jumped at the highest monthly rate on record in October, with total input prices up 4.6% from September.
It should be only a matter of time before this feeds into higher consumer prices. The Bank of England now expects inflation to hit 2.7% next year, but some analysts are predicting it will reach 4% as sterling weakness pushes up import costs."
