Lower food costs lead to fall in inflation

UK Inflation fell in September, as lower price tags on food eased pressure on household finances.

The pair made off with the chocolate without paying.

Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) fell to 2.4% in September, compared to 2.7% in August.

This was the lowest level since June, when CPI was also 2.4%.

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It came as a surprise to economists who were expecting inflation to fall to 2.6%.

Sterling was 0.3% down against the US dollar at 1.31 following the news. Versus the euro, the pound was down 0.2% at 1.13.

Mike Hardie, head of inflation at the ONS, said: “Food was the main downward pull on inflation as last year’s September price rises failed to reappear, while ferry prices dropped after their surprisingly high summer peak.

“However, it wasn’t all one-way traffic with energy suppliers pushing up their prices.”

The price of food and non-alcoholic beverages fell 0.2% month-on-month compared to a 0.8% rise during the same period last year.

Some of the biggest drops were seen in sweet treats such as chocolate, with prices down 1.4%. Bread and cereals and meat also notably declined by 0.9% and 0.4% respectively.

Recreation and culture prices returned to more normal levels, growing by just 0.3% compared to 0.8% a year earlier.

Cultural services, which includes theatre tickets, fell 2.5% while games, toys and hobbies rose just 1.6%, compared to a 4.4% rise in September last year.

Transport services were down 9.7%, after falling 7.8% last year.

Prices for trips made by sea and waterway were especially hard-hit, dropping 26.5% compared to a decline of 15.2% last year.

Meanwhile the downward trend in air travel continued, dipping 27.3% following a 26.7% fall a year earlier.

The drag on inflation was partially offset by increases in electricity and gas prices.

Electricity rose 1.8% and gas was up 1.2%, whereas both were flat this time last year.

At the pumps, motorists were also facing higher fuel costs last month, with petrol up by 1.7p per litre on the month to 130.3p per litre.

Diesel also rose by 1.5p to 134.3p per litre.

The Retail Prices Index (RPI), a separate measure of inflation, was 3.3% last month, down from 3.5% in August.

The Consumer Prices Index including owner-occupiers’ housing costs (CPIH) - the ONS’ preferred measure of inflation - was 2.2% in September, down from 2.4% in August.

Mr Hardie said: “UK house prices again increased across the year with growth particularly strong in the east and west Midlands. We continued to see a slowdown in London and the East of England.