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UK inflation rate remains negative in October UK inflation rate remains negative in October
(35 minutes later)
UK inflation as measured by the Consumer Prices Index (CPI) remained at -0.1% in October, the Office for National Statistics has said.UK inflation as measured by the Consumer Prices Index (CPI) remained at -0.1% in October, the Office for National Statistics has said.
The news will further dampen expectations of a rise in interest rates any time soon.The news will further dampen expectations of a rise in interest rates any time soon.
The Bank of England said earlier this month that the global economy was weakening, depressing inflation risks.The Bank of England said earlier this month that the global economy was weakening, depressing inflation risks.
Following this report, many economists forecast that rates would not rise until well into next year.Following this report, many economists forecast that rates would not rise until well into next year.
October marked the first time consumer prices have fallen on an annual basis for two months in a row. The price of clothing rose last month, but this was offset by a fall in food, alcohol and tobacco.October marked the first time consumer prices have fallen on an annual basis for two months in a row. The price of clothing rose last month, but this was offset by a fall in food, alcohol and tobacco.
The ONS said prices fuel prices fell by 14% on an annual basis, while food and drink prices fell by 2.7% in October and energy costs were 4.1% lower.The ONS said prices fuel prices fell by 14% on an annual basis, while food and drink prices fell by 2.7% in October and energy costs were 4.1% lower.
"This is now the ninth month running that CPI has been at or very closer to zero," ONS statistician Richard Campbell said."This is now the ninth month running that CPI has been at or very closer to zero," ONS statistician Richard Campbell said.
In its latest quarterly Inflation Report, released earlier this month, the Bank said that inflation was unlikely to rise to 1% until the second half of next year, while it would be two years before it reached its 2% target.In its latest quarterly Inflation Report, released earlier this month, the Bank said that inflation was unlikely to rise to 1% until the second half of next year, while it would be two years before it reached its 2% target.
An ONS measure of core consumer price inflation, which strips out changes in the price of energy, food, alcohol and tobacco, rose to 1.1%, compared with economists' expectations for it to hold at 1%.An ONS measure of core consumer price inflation, which strips out changes in the price of energy, food, alcohol and tobacco, rose to 1.1%, compared with economists' expectations for it to hold at 1%.
Economists said negative inflation would give a short-term boost to the economy.
Chris Williamson, chief economist at Markit, said: "The benefit of ongoing low inflation is not only that interest rates will stay lower for longer but that real wage growth remains robust, which will in turn continue to boost consumer spending power and help sustain the economic upturn.
"The deflationary picture supports the Bank of England's dovish outlook, which envisages interest rates staying on hold until 2017. However, this outlook is dependent on oil prices and wage pressures remaining low, both of which remain something of an unknown."
Andrew Sentance, senior economic adviser at consultants PwC, said the latest ONS data did not point to "a more generalised deflation". As fuel price falls drop out of the annual calculation over the next few months, he expected the inflation rate to move up to "about 1% or higher".
He added: "Meanwhile, consumers continue to benefit from the combination of stronger wage increases and very slightly falling prices. The resulting increase in real wages and household disposable incomes should continue to be supportive of consumer spending and economic growth over the year ahead."
The ONS also released figures for house price inflation, which showed an 6.1% annual rise across the UK as a whole in September, compared with 5.5% in August.The ONS also released figures for house price inflation, which showed an 6.1% annual rise across the UK as a whole in September, compared with 5.5% in August.