Economists’ surprise as UK inflation falls to 2.4% last month

UK inflation fell to 2.4% in September, as lower price tags on food eased pressure on household finances.

Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) fell to 2.4% in September, compared to 2.7% in August.

This was the lowest level since June, when CPI was also 2.4%.

It came as a surprise to economists who were expecting inflation to fall to 2.6%.

Sterling was 0.3% down against the US dollar at 1.31 following the news. Versus the euro, the pound was down 0.2% at 1.13.

Mike Hardie, head of inflation at the ONS, said: “Food was the main downward pull on inflation as last year’s September price rises failed to reappear, while ferry prices dropped after their surprisingly high summer peak.

“However, it wasn’t all oneway traffic with energy suppliers pushing up their prices.”

The price of food and non-alcoholic beverages fell 0.2% month-on-month compared to a

Warning: Howard Archer

0.8% rise during the same period last year.

Some of the biggest drops were seen in sweet treats such as chocolate, with prices down 1.4%. Cultural services, which includes theatre tickets, fell 2.5% while games, toys and hobbies rose just 1.6%, compared to a 4.4% rise in September last year.

Transport services were down 9.7%, after falling 7.8% last year.

Prices for trips made by sea and waterway were especially hard-hit, dropping 26.5% compared to a decline of 15.2% last year.

Meanwhile the downward trend in air travel continued, dipping 27.3% following a 26.7% fall a year earlier. The drag on inflation was partially offset by increases in electricity and gas prices.

Electricity rose 1.8% and gas was up 1.2%, whereas both were flat this time last year.

At the pumps, motorists were also facing higher fuel costs last month, with petrol up by 1.7p per litre on the month to 130.3p per litre. Diesel also rose by 1.5p to 134.3p per litre.

Howard Archer, chief economic adviser at EY Item Club, said: “September’s drop reinforces belief that August likely marked the 2018 peak in inflation, but it could prove relatively sticky in the near term.

“This is likely to be the consequence of a higher oil price, previously announced rises in domestic energy prices and recent sterling weakness.

“There is also the risk that food prices could move back up as a result of the summer’s heatwave in the UK and Europe following on from severe cold weather in the first quarter.”