Rising food prices offset by cheap fuel

Inflation held steady last month as rising food prices were countered by a drop in fuel costs.

Figures from the Office for National Statistics showed the Consumer Prices Index (CPI) measure of inflation was 3% in October, unchanged from a fiveyear high in September.

Economists had expected 3.1%, which would have forced Bank of England Governor Mark Carney to write a letter to Chancellor Philip Hammond.

The government has set an inflation target of 2%, with protocol dictating that the bank must contact Mr Hammond if inflation exceeds 3% or falls below 1%.

The bank, which hiked base rates to 0.5% this month, expects CPI to peak around 3.2%, adding further pressure to UK households grappling with paltry wage growth.

Annual food prices rose to the highest level in four years, up 4.2% last month in contrast to a 3.4% expansion in September. On the month, food prices grew by 0.6%, up from a 0.2% fall over the same period last year.

Electricity, gas and other domestic fuels pushed 1.3% higher on a monthly basis, compared to 0.6% growth in October 2016.

That jump was triggered by British Gas, which decided to hike its standard tariff by 12.5% on September 15.

The main downward pressure on the cost of living came from motor fuel prices, which fell by 0.4% month-onmonth after rising by 2.3% in October 2016.