Why UK inflation made a surprise fall


Most analysts were expecting inflation to rise this month. But, bargains on the high street and low hotel costs led to a drop which wasn’t anticipated.
Bank of England governor Mark Carney has, however, warned that soaring inflation is definitely on its way in 2017.
Inflation for October, measured by the consumer prices index (CPI) was 0.9 per cent, down slightly from September’s figure which was 1 per cent.
Inflation was actually widely predicted to have reached 1.1 per cent during October, which would have been its highest level in nearly two years.
However, experts are still staying that prices will rise. This is largely because the price manufacturers and producers of goods are paying for their raw materials is vastly up.
According to figures released by the Office for National Statistics (ONS), input costs have gone up by 4.6 per cent during the month of October. That is the most input prices have ever risen in one month since records started 20 years ago.
However, Mr Carney has told MPs and media that he has no doubt inflation is “going to come” as a result of the UK’s decision to leave Europe.
The bank boss said while it would take a while for the increased costs caused by struggling sterling to filter through to consumers, it would definitely happen.
He is warning of a “slow and protracted” process which will gradually push up prices of goods over the next year.
Inflation was believed to have fallen during October, rather than risen as expected, partly because of unseasonably warm weather. This meant that British consumers weren’t out on the High Street purchasing winter clothes, and led to sales in many retailers.
In a round table event attended by ministers and members of the British Retail Consortium, the bosses of all major supermarkets said they had insurance to cover shifts in the value of sterling for up to a year.
However, once their “hedging contracts” ran out, Mr Carney fully expects that higher costs will be passed onto consumers.
Mr Carney said:“In my view this is one of the most competitive, if not the most competitive and innovative, retail sectors in the world and so what [retailers] are doing now is trying to figure out how to take out other costs and absorb as much as possible but inevitably some of this big move will be passed through and that is reflected in our forecast.”

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Sam Dunis
Sam comes from Edinburgh and grew up with his mother and step-dad. His father left the country when he learnt he was going to be a father. Sam never had the opportunity to see him and still wonders what he looks like. School wasn’t his thing, he would rather spend sometime with his friends, play rugby and chat girls up. Sam used to help his step dad, a plumber, during summertime. After doing it for several years, he realized he could work with his father and hopefully take over the family business when his step-father would retire. Sam spends most of his time off taking care of his mother, training with the local rugby team. Sam doesn’t have any girlfriend at the moment. He is therefore going out every weekends.