UK Inflation Rate Falls More Than Expected

UK annual inflation rate eased to 1.2 percent in September of 2014 from 1.5 percent in August. It is the lowest rate in five years driven by a fall in food and motor fuel prices.

Housing and household services (including utility bills) accounted for a third of the rate of inflation. In the year to September 2014, food prices fell by 1.5 percent and prices of motor fuels fell by 6.0 percent. If falling food and motor fuel prices were excluded, the rate of inflation would be a third higher. 

On a monthly basis, consumer prices were flat as there were no notable upward pressures. The largest downward contributions to the change in the CPI 12-month rate between August and September 2014 came from transport prices (down 2.4 percent), mostly due to sea fares and air fares. Prices, overall, for these fares always fall in September following the summer holiday period. Cost of recreation and culture fell slightly (-0.1 percent) due to prices of technological goods such as laptop and tablet computers, computer accessories (eg printers and routers), games consoles and computer games. Prices for hardback books and ebooks also contributed to the slowdown in the rate of inflation. 

Annual core inflation, which strips out cost of energy, food, alcohol and tobacco, slowed to 1.5 percent in September from 1.9 percent in August.

UK Inflation Rate Falls More Than Expected

ONS | Joana Taborda |
10/14/2014 9:51:07 AM