18.11.2003

October slowdown for UK inflation

The UK inflation rates for October were released today and showed a slowdown in headline and underlying rates, raising questions about whether the Bank of England were premature in raising interest rates earlier this month.

The RPI.X underlying rate dropped from 2.8 per cent to 2.7 per cent, while the headline rate fell 0.2 per cent from 2.8 to 2.6 per cent, the lowest level since October 2002.

The fall was largely attributed to a slow down in house prices, but other factors included falls in telephone call charges and foreign holidays.

The Harmonised Index of Consumer Prices (HICP), which the Treasury will adopt next year, remains unchanged at 1.4 per cent placing it among the lowest in the EU.

The EU average HCIP was 1.9 per cent in September, which was down from 2.0 per cent reported in August.

In separate news today, the US dollar dropped 1 per cent against the euro to $1.1892, reflecting a week dollar and a strong euro.
Sterling strengthened slightly against the dollar to $1.7 to the pound, but fell against the euro to €1.43.