U.K. Consumer Inflation Flat in October as Raw Material Prices Slow

By Wiktor Szary and Jason Douglas Features Dow Jones Newswires

U.K. inflation remained unchanged in October to stay at a five-year high, but growth in raw material prices slowed sharply, new figures showed Tuesday, signaling that the impact of the pound's steep depreciation last year may be starting to wane.

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Consumer prices grew 3% in October, unchanged from the previous month, but still recorded the joint-fastest annual increase since March 2012, data published by the U.K.'s Office for National Statistics showed.

Growth in input prices paid by factories, however, slowed to its lowest level since the immediate aftermath of last year's Brexit vote, and stood at 4.6% in October from 8.1% the previous month. This compares with nearly 20% at the beginning of the year.

This suggests that the pound's sharp post-referendum fall, which spurred price growth in the U.K. after years of slow inflation, may have nearly fed through the supply chain.

October's headline consumer inflation figure was below the expectations of analysts polled by The Wall Street Journal, who predicted that price growth would accelerate to 3.1%, and went against the projection of the Bank of England, which had forecast inflation in excess of 3%.

Earlier this month, BoE policymakers increased borrowing costs for the first time in a decade, reversing the emergency quarter-point cut enacted shortly after Brexit.

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The central bank expects that inflation will likely peak in October, and gradually return to the 2% target over the next three years.

Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at Jason.Douglas@wsj.com

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November 14, 2017 05:04 ET (10:04 GMT)