UK inflation unexpectedly cools in September - but analysts say it's the 'lull before the storm'
UK inflationslowed in Septemberlargely due to a measurement quirk, the country's stats office said.
- Economists expect prices to jump before the year is out, as
energy pricesand supply problems hit the economy.
UK inflation unexpectedly slowed down in September due largely to a measurement quirk, the Office for National Statistics said Wednesday.
Yet analysts said it was most likely a blip, with many predicting that inflation will shoot upwards to a decade high of above 4% before the year is out. One economist said September's figures were "the lull before the storm."
Consumer price index inflation slowed to 3.1% in September from 3.2% in August, the ONS said. Analysts had been expecting another 3.2% figure.
The ONS said this was largely because of "base effects." A meal subsidy scheme launched in August 2020 pushed up year-on-year inflation in August this year. It came to an end in September 2020, which weighed on last month's figures.
There were signs of strong inflation elsewhere. The UK, like countries around the world, has been hit by sharply rising energy prices and supply chain problems. Economists say Brexit is likely to have made the disruption worse.
Factory gate prices - at which manufacturers sell to wholesalers - rose 6.7% year-on-year in September, compared to 6% in August. The price of materials and fuels used by manufacturers rose 11.4%, up from 11.2% the previous month.
ONS head of prices Mike Hardie said the base effect quirk in the headline inflation rate was "offset by most other categories, including price rises for furniture and household goods."
He also said food prices fell more slowly than this time last year and added: "The cost of goods produced by factories rose again, with metals and machinery showing a notable price rise. Road freight costs for UK businesses also continued to rise across the summer."
The pound slipped after the figures were released and was trading roughly 0.1% lower at $1.377.
Inflationary pressure has led to tough talk at the
Paul Dales, chief UK economist at Capital Economics, said: "This feels a bit like the lull before the storm." Dales said a sharp rise in UK energy bills this month had probably lifted
Silvia Dall'Angelo, senior economist at Federated Hermes, said: "The inflation picture is set to get worse in the short term." Yet she said inflation would cool sharply over the medium term.
- No crypto ban in India — SEBI will reportedly be pulled in to regulate the sector
- I tried a calendar that's meant to boost productivity by mapping out the number of weeks you have left to live — here's how it went
- I wore the same outfit for a week, as part of a productivity hack promoted by Steve Jobs — but it didn't really work. After speaking to psychologists, I'm not surprised.
- Nifty 50 goes below 17,000-mark on rising Omicron cases, fear of lockdown
- Indian government is reportedly looking to regularise work from home with a comprehensive framework
- Companies raised ₹52,759 crore from IPOs till October this fiscal, says Nirmala Sitharaman
- WPP acquires branding and design agency Made Thought
- WhatsApp announces incubator programme, will select 10 firms to build digital health solutions in India