U.K. CPI inflation seems to have risen in September

The consumer price index inflation in the U.K. is on an increasing trend. The impacts of decline in the sterling, along with base effects from the oil price bottoming out is expected to have resulted in a further acceleration in inflation in September, according to Societe Generale.

Core inflation is expected to have stayed at 1.3 percent year-on-year as the effect of decline in pound is felt only very slowly in goods prices; however, non-core prices are beginning to respond. Prices of petrol increased 2 percent sequentially. It is expected to have contributed over 0.1 percentage points to inflation.

Meanwhile, food inflation is also expected to have added upward pressure on the headline figure.  In terms of GBP, the UN FAO world food price index rose 28.3 percent year-on-year in September and by 23 percent in the last six months. However, the CPI food prices have hardly moved. Prices of imported food are rising 12.7 percent year-on-year so it cannot be long before this impact begins to be felt in CPI, stated Societe Generale. Food price deflation is expected to have eased to -2 percent year-on-year from -2.2 percent year-on-year.

“The overall result should be that CPI inflation rises from 0.6 percent to 0.8 percent yoy with a risk of 0.9 percent yoy”, added Societe Generale.