UK inflation rate rises to 1.5 pct in Oct

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LONDON -British consumer price inflation rose to 1.5 percent in October, due largely to a more moderate fall in fuel prices compared to last year, official statisticians reported Tuesday.

The rise from a 1.1 percent rate in September was not a surprise to most analysts, and was not caused by stronger consumer demand as much as base effects from last year.

The Office for National Statistics said fuel prices were the main driver — a 0.7 percent fall in October was much smaller than the 6.1 percent slump seen a year earlier, when energy prices were falling from record highs as the financial crisis peaked.

Air fares were up 1.5 percent in October, compared to fall a year ago, and the price of second-hand cars rose 1.1 percent.

The broad-based retail price index was down by 0.8 percent in October after dropping 1.4 percent in September. Retail prices excluding mortgage interest payments rose by 1.9 percent after rising 1.3 percent in September, the agency said.

The Bank of England has forecast that inflation will rise above the government's official 2 percent target in coming months, fueled in part by the end of a temporary cut in the value-added tax rate in January.

"No need to panic," Jonathan Loynes, chief European Economist at Capital Economics.

"We remain convinced that the vast amount of spare capacity in the economy will keep underlying price pressures subdued for a prolonged period," Loynes said, though he said inflation could peak at 3 percent in the near term.

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On the Net: http://www.statistics.gov.uk/pdfdir/cpi1109.pdf

2009-11-17 05:30:39