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U.K. inflation falls to -0.1% in September from 0.0%

Published 10/13/2015, 04:36 AM
© Reuters.  U.K. CPI down 0.1% in September

Investing.com - Consumer price inflation in the U.K. fell into negative territory in September, underlining concerns over deflationary pressures and reinforcing views that interest rates will remain pegged at record-lows in the near future, official data showed on Tuesday.

In a report, the U.K. Office for National Statistics said the rate of consumer price inflation fell to a seasonally adjusted -0.1% last month, from 0.0% in August. Analyst had expected a flat reading in September.

Month-over-month, consumer price inflation declined -0.1% in September, compared to estimates for a flat reading and following a gain of 0.2% in August.

Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborne, as inflation is more than a percentage point below the central bank's target of 2.0%.

BOE officials have said recently they expect inflation to hover around zero for much of this year, before accelerating back to target during 2016 and 2017.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.0% last month, unchanged from August and compared to forecasts for a reading of 1.1%.

The retail price index increased 0.8% in September, missing expectations for 1.0% and down from 1.1% a month earlier.

The data also showed that the house price index rose 5.2% in August, unchanged from July and missing forecasts for a gain of 5.5%.

GBP/USD was trading at 1.5256 from around 1.5288 ahead of the release of the data, while EUR/GBP was at 0.7457 from 0.7453 earlier.

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Meanwhile, European stock markets held on to losses. London’s FTSE 100 shed 0.85%, the EURO STOXX 50 declined 1.45%, France's CAC 40 slumped 1.8%, while Germany's DAX dropped 1.4%.

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