UK inflation picks up in October
LONDON: British inflation picked up by a litle more thanexpectedinoctoberasthecovid-19pandemic continued to affect the cost of goods, with clothing and food prices rising during the month, official data showed on Wednesday.
Consumer prices rose 0.7% in annual terms, ater a 0.5% rise in September, the Office for National Statistics said, still far below the Bank of England’s 2% target.
A Reuters poll of economists had pointed to a reading of 0.6%.
Unlike last year, food prices rose in October when people stocked up on potatoes and fruit.
Previouslypublishedshoppingsurveyshadpointed to renewed stockpiling as health restrictions spread through the United Kingdom.
Paul Dale, an economist at consultancy Capital Economics, said there had been “pockets of pandemic-induced inflation”.
“Butwesuspectthattheweakeconomywillprevent a sustained period where inflation is above the 2% target, unless there is a no-deal Brexit,” he added.
In that case, Dales said inflation could rise to 3% or 4%, pushed higher by a fall in the value of sterling.
Othereconomistssawpotentialformoreinflation as cuts to sales taxes and energy bills are likely to be reversed next year.
Earlier this month the Bank of England said it expectedtohitits2%inflationtargetintwoyears’time.
Its main focus has been on supporting Britain’s economy through one of the worst years in its history.
The ONS said prices for clothes rose in October, returningtotheirnormalseasonalpaternaterdisruption this year caused by the coronavirus lockdown.
Recreation and culture represented the biggest drag on inflation last month, as prices of package holidays and cinema outings fell. By contrast, prices of computer games rose.
A new energy price cap also tempered the rise in inflation in October.