Inflation Unchanged in September

The Office for National Statistics (ONS) reported no change in the UK Consumer Prices Inflation (CPI) at 1.7% pa in September 2019.

The Consumer Prices Index including owner occupiers housing costs (CPIH) was also flat at 1.7% pa.

Motor fuels, second-hand cars, gas and electric along with other fuels where the largest contributors to the downward change in August and September 2019.  They were offset by upward movements in furniture, household appliances, hotel stays, culture items and recreation. 

What is the difference between RPI and CPI?

Retail Prices Index (RPI) includes the costs of housing (mortgage interest costs, rents and council tax for example) while CPI does not.

Comment

This is why we still go by the old measure of inflation, Retail Prices Index (RPI) as it includes housing costs i.e. it is a real measure of the total cost of living as well as many pension funds are still linked to this.  RPI fell back to 2.4% pa in September from 2.6% pa in August.  This is still above government target trend growth.

That said, with increase increased employment rates in the UK as well as wage inflation increases running at 4% pa, prices look set to increase Brexit or no Brexit although Brexit may or may not force the Bank of England's hand to increase interest rates at a time when it would rather not given global economic slowdown and Brexit uncertainty.