U.K. headline inflation remains unchanged in October

U.K. headline inflation remains steady in October. The consumer price inflation came in at 2.4 percent in October, unchanged from September. While upward impacts were noted in energy-related categories of the U.K. inflation basket – with auto-fuel prices rising 0.7 percent last month and two of the big six energy firms increasing utility prices – these were cancelled out by downward effects in food prices and several ‘core’ goods categories. Especially, clothing and footwear prices dropped last month, while transport services prices dropped more sharply in October.

“Overall, however, minimal changes were recorded in the other main categories of inflation, meaning that alternate measures of inflation were also unchanged from their September levels, including ‘core’ CPI, CPIH and RPI”, noted Lloyds Bank in a research report.

The annual pace of goods price inflation eased to 2.3 percent from 2.5 percent. This is probably because of the ongoing unwinding of previous currency depreciation, which should continue to bear down on goods price inflation for some time still. Nevertheless, it is the outlook for domestically generated inflation that will be a key determinant to the overall path that inflation takes in the quarters ahead.

“Against a backdrop of relatively soft productivity growth and accelerating wage growth, rising unit labour costs should ensure that headline CPI continues to remain sticky and above target, for some time to come”, stated Lloyds Bank.

At 17:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bullish at 66.1911, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -71.0069. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex