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inflation Britain had an unexpectedly flat year to September as lower food costs offset higher prices at the pump, official data showed on Wednesday, raising expectations of another interest rate cut next month.
National Statistical Office Consumer prices were said to have increased by 3.8% on an annual basis, unchanged from levels seen in the previous two months.
Most economists expected the rate to rise to 4%, double the Bank of England’s target.
Economists said the flat reading would boost the central bank’s expectations that inflation has peaked and will return to its target in the coming months.
“Price pressures should gradually begin to ease in the coming months, but we are unlikely to see much of a decline in inflation until the first half of next year,” said Martin Sartorius, chief economist at the International Monetary Fund. Confederation of British Industry,
He said the “negative surprise” in inflation raises the possibility that the central bank could cut interest rates again at its next policy meeting on November 6. Last month, it kept its key interest rate at 4% as Britain’s inflation worries weighed on policymakers.
Inflation data will also be welcomed treasure chairman Rachel Reeves As she prepares to deliver a crucial budget statement on November 26, taxes are expected to rise again. The September inflation rate is used to add welfare benefits for the coming year, so the cost of funding will be lower than anticipated.