British annual inflation dropped faster than expected in October to a near three-year low at 1.5 percent as lower energy prices offset rising prices for clothes, official data showed Wednesday.
The Consumer Prices Index 12-month rate, the lowest since November 2016, compared with 1.7 percent in September, the Office for National Statistics (ONS) said in a statement published ahead of next month’s UK general election.
Analysts’ consensus forecast had been for a drop to 1.6 percent.
“Admittedly, the drop mainly reflected a slump in energy inflation and so was not a reflection of a weakening in underlying inflationary pressures,” noted Ruth Gregory, senior UK economist at Capital Economics research group.
“Overall, the figures do little to change our view that inflation will spend more time below (the Bank of England’s target of) 2.0 percent than above it in 2020 and that if Brexit is delayed further, interest rates will be cut, in May,” she added.
The pound meanwhile showed little reaction to the latest inflation data.
“For the third day running we’ve had some news that could have caused some selling in the pound, but the currency has remained largely unperturbed with economic data still playing second fiddle to political developments in terms of moving the markets,” said David Cheetham, chief market analyst at XTB trading group.
Official data Tuesday showed British unemployment hitting 3.8 percent, a fresh 45-year low. And on Monday, the ONS said that Britain’s economy avoided recession in the third quarter, with growth of 0.3 percent.