UK inflation report to show if price rises slowed in September – business live
From
Newsflash: UK inflation was unchanged at 6.7% in September, matching August’s reading, and dashing hopes of another fall.
The news that prices rose at the same pace last month halts months of progress towards easing the pressure on households.
It leaves inflation over three times above the Bank of England’s target of 2%.
Annual inflation was unchanged in September 2023:
▪️ Consumer Prices Index including owner occupiers’ housing costs rose by 6.3% in the 12 months to September, unchanged from August ▪️ Consumer Prices Index (CPI) rose by 6.7%, unchanged from August.
Rsing petrol prices prevented UK inflation falling from August’s 6.7%, as City economists had hoped.
The Office for National Statistics says the largest downward contributions to the monthly change in inflation came from food and non-alcoholic beverages, where prices fell on the month for the first time since September 2021.
Furniture and household goods prices rose by less than a year ago.
However, rising prices for motor fuel made the largest upward contribution to the change in the annual rates – keeping inflation at 6.7% in September.
The average price of petrol rose by 5.1p per litre between August and September to stand at 153.6p litre in September, the ONS says.
Similarly, diesel prices rose by 6.3p per litre to 157.4p per litre.
On a monthly basis, consumer prices rose by 0.5% in September alone, today’s inflation report shows.
Newsflash: UK inflation was unchanged at 6.7% in September, matching August’s reading, and dashing hopes of another fall.
The news that prices rose at the same pace last month halts months of progress towards easing the pressure on households.
It leaves inflation over three times above the Bank of England’s target of 2%.
Annual inflation was unchanged in September 2023:
▪️ Consumer Prices Index including owner occupiers’ housing costs rose by 6.3% in the 12 months to September, unchanged from August ▪️ Consumer Prices Index (CPI) rose by 6.7%, unchanged from August.
While we await the latest UK inflation report (due in 10 minutes), there is encouraging economic news from China this morning.
China’s gross domestic product grew 4.9% year on year in the third quarter, beating market expectations.
Growth was boosted by a jump in retail sales growth, as Beijing steps up support for the world’s second-biggest economy.
Stephen Innes, managing partner at SPIAssetManagement, says:
China’s economic recovery showed mild momentum in the third quarter, posting a 1.3% growth from the previous three months.
This growth suggests a modest improvement in the Chinese economy. However, there are ongoing calls for increased policy support to maintain consistent growth, as there are concerns about the sustainability of the recovery.
Chinese authorities have implemented various measures to support economic growth, particularly in response to challenges from the property market and weak domestic demand. Focusing on policy support will likely continue as China seeks to stabilize its economy.
Analysts at RBC Capital Markets predict UK inflation only fell slightly last month, to 6.6% from 6.7% in August.
They point out that there are a wide range of estimates, adding:
Within the detail, the main focus will be services inflation, which surprisingly fell from 7.4% to 6.8% in the August report, and is one of the key factors the BoE is monitoring for evidence it has tightened enough (along with earnings growth and labour market tightness).
Rate expectations slipped slightly after yesterday’s slightly softer earnings data with SONIA forwards pricing in around 12bp of further tightening spread over the next three MPC meetings.
Today’s inflation reading could be important in calculating how much benefits payments will increase next year.
It could also influence some tax increases, such as business rates.
PA Media explains:
Inflation-linked benefits, such as universal credit, and tax credits, are expected to rise in April next year by the rate of CPI inflation from this September.
A higher-than-expected rate of inflation is therefore likely to see increased costs for the Treasury.
Nevertheless, this outcome could also result in higher tax revenues, as some taxes are tied to the inflation rate for the month.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
We’ll learn today if the UK’s cost of living squeeze is easing, when the latest inflation data is released at 7am this morning.
Economists predict that inflation fell last month, with the Consumer Prices Index forecast to fall to around 6.6% in September, down from 6.7% in August.
That would be the lowest annual inflation rate since February 2022, but still leave prices rising more than three times faster than the UK’s 2% target.
Food price inflation, which soared after the Ukraine war began, is expected to have slowed, as the price of some products, such as butter and milk, dropped recently.
Clothing is also expected to contribute to the lower inflation rate, with an increase in discounting from shops to stimulate more sales.
But higher fuel prices could have an upward impact on inflation, following the rise in prices at the pumps.
A fall in inflation today could deter the Bank of England from raising interest rates at its next policy meeting in November, after it paused its rate rises in September.
Michael Hewson of CMCMarkets says the Bank was right to leave rates at 5.25% last month, so it can assess the” pass-through” of its previous 14 rate hikes:
It’s about time this penny dropped given the challenges facing the UK economy and its good that the MPC has finally woken up to this, although there are differing views amongst MPC members of how much has trickled down with arch dove Swathi Dhingra arguing that only 25% of the impact has been felt.
UK CPI Preview: Inflation set to extend downward trend in September, denting prospects of further rate hikes – by @FXstreetNewshttps://t.co/gTF8DmFRau