Inflation in the UK has increased for the first time since February, according to the latest figures from the Office for National Statistics.
The consumer prices index rose by 1.5% in October, up from 1.1% in September, mainly as a result of fuel prices falling far less than they had 12 months previously. Retail price index inflation, which includes mortgage interest payments, fell by 0.8% compared with the larger fall of 1.4% seen in September.
The figures suggest that the Bank of England‘s recent forecast, that inflation would accelerate sharply in the next few months before falling again next year, will not be too wide of the mark. Commenting on the data, David Kern, chief economist at the British Chambers of Commerce, said that the temporary fluctuations in the rate of inflation did not justify a change of Bank of England policy.
“Medium term inflation trends will be driven by the underlying weakness of demand in the economy and ample spare capacity, which still suggests that inflationary pressures are modest overall,” he added. “Given the serious risks facing the UK economy and the dangers of a double-dip recession in 2010, it is important for the Monetary Policy Committee to persevere with an aggressive quantitative easing programme, and to consider special measures aimed at boosting bank lending to businesses.”
Justin Moy