UK Inflation Rate Holds Steady at 6.7% in September
Despite expectations of a slight decrease, British annual consumer price inflation (CPI) remained unchanged at 6.7% in September, matching August’s 18-month low, according to official data released on Wednesday.
Stability Amidst Uncertainty
Economists surveyed by Reuters had predicted a marginal decrease to 6.6%, but the inflation rate held steady. This news comes as the Bank of England is anticipated to maintain interest rates at 5.25% on November 2nd. In September, the bank chose to leave rates unchanged following an unexpected drop in the inflation rate the day before its decision.
Prior Highs and Current Outlook
In October 2022, British consumer price inflation reached its highest level in 41 years, peaking at 11.1% due to surging European energy prices following Russia’s invasion of Ukraine. This, coupled with supply chain difficulties and labor shortages resulting from the ongoing COVID-19 pandemic, exerted significant pressure on the economy. The Bank of England’s latest forecasts, released in August, predict that inflation will remain above its 2% target until early 2025.
Core Inflation and Predictions
The data for September also revealed that core inflation, which excludes volatile prices of food, energy, alcohol, and tobacco, declined to 6.1% from August’s 6.2%. Economists had anticipated a decline to 6.0%. Core inflation is often considered a better indicator of underlying price trends.
These figures indicate the ongoing challenges faced by the UK economy. While inflation has not increased further, it remains at a historically high level. The Bank of England will closely monitor these developments as it formulates its monetary policy moving forward.
