LONDON (dpa-AFX) - UK consumer price inflation eased in October, ahead of the Autumn budget announcement, official data revealed Wednesday. The moderation has eased pressure on households and raised hopes of interest rate cut in December.
The consumer price index logged an annual growth of 3.6 percent in October, slower than the 3.8 percent rise in September. However, inflation was slightly faster than economists' forecast of 3.5 percent.
On a monthly basis, the CPI moved up 0.4 percent, in line with expectations, after remaining flat in September.
Core inflation that excludes prices of energy, food, alcohol and tobacco, edged down to 3.4 percent from 3.5 percent in September.
The annual increase in goods prices weakened to 2.6 percent from 2.9 percent. Likewise, services inflation softened to 4.5 percent from 4.7 percent.
Chancellor Rachel Reeves said the fall in inflation is 'welcome'. But she said more needs to be done to bring it down.
The chancellor is set to deliver the Autumn Budget on November 26. Reeves said the budget next week will deliver on the public's priorities to cut NHS waiting lists, cut national debt and lower the cost of living.
Earlier this month, the Bank of England had maintained its key interest rate at 4.00 percent in a split vote. The central bank observed that the inflation has peaked in September and signaled that the interest rate will follow a gradual downward path if disinflation process continues.
The latest data is a tad hawkish for the BoE, ING economist James Smith said. However, the bank is still likely to cut rates in December, the economist added.
With weak GDP figures for the third quarter, softening labor market combined with the likelihood of further fiscal consolidation measures at the Budget, data should give the BoE's policymakers confidence that inflation risks are diminishing, Confederation of British Industry Lead Economist Ben Jones said.
'If this trend continues, the case for an interest rate cut in December looks increasingly compelling,' Jones added.
Another report from the ONS showed that factory gate prices accelerated in October on higher food, motor vehicle and other transport equipment prices. Factory gate prices were up 3.6 percent from the last year, following a 3.5 percent rise in September.
Meanwhile, input price inflation eased to 0.5 percent in October from 0.7 percent in the previous month. Prices were expected to climb again by 0.7 percent.
Monthly output prices showed no movement in October, which was unchanged from September. At the same time, input prices slid 0.3 percent after September's 0.1 percent drop.
In September, average UK house prices grew 2.6 percent from the last year, the ONS said in a separate report. This followed a 3.1 percent increase in August.
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