“Sharp fall in October inflation masks challenges ahead” says Yael Selfin, Chief Economist at KPMG UK.
“Today’s data reflect the fall in the energy price cap, which is down significantly compared to a year ago when household energy bills were capped at £2,500 by the Energy Price Guarantee. While the drop in inflation will be welcomed by households, it is not in itself a signal of sustained inflationary easing but rather reflects the lagged impact of the fall in wholesale gas prices feeding through to energy bills.
“Despite the sharp fall in energy prices, underlying indicators of inflationary pressure such as services prices continue to show persistence. More encouragingly however, producer price inflation moved into negative territory, pointing to further disinflationary momentum in the pipeline.
“With headline inflation remaining significantly above target, today’s data are unlikely to shift the dial for the Bank of England, with interest rates expected to remain at their current level until the second half of next year.”
