UK October inflation falls to 5%


The rate of Consumer Prices Index (CPI) inflation in the UK fell slightly to 5% during October, down from a rate of 5.2% the month before.

Falls in the price of food, air transport and fuel helped to push the inflation rate lower.

Despite the drop, the rate still remains well above the Bank of England's target of 2%.

Retail Prices Index (RPI) inflation - which includes mortgage interest payments - also fell to 5.4% from 5.6%.

Despite the fall, the government said it recognised that inflation remained high.

"These are difficult times for households as prices continue to be affected by conditions in the global oil and gas markets," said a Treasury spokesperson.

MPs are set to debate a motion later, which urges the government to limit increases in the price of petrol.


Details from inflation calculator

The government plans to increase fuel duty by 3p a litre in January.

Energy costs

Food prices were driven down by heavy supermarket discounting and good harvests, according to the Office for National Statistics.

Air fares, which are historically very changeable, fell by 6% compared to the previous month.

Petrol also fell by 0.5p a litre, reflecting falls in the price of crude oil due to the weakening global economy.

Upward pressure on prices came from increases in the cost of clothing, electricity and gas.

Price rises from all the major energy suppliers have increased domestic fuel bills and are also expected to push up November's inflation figures.


Start Quote

This confirms that weak consumer demand is forcing some businesses to reduce their margins”

End Quote David Kern British Chamber's of Commerce

The prolonged period of high inflation has made it difficult for savers to keep up with rising prices.

According to the Moneyfacts financial information service, there is no standard savings account currently available which would allow people to ensure their savings keep up with inflation, after tax is taken into account.

"Over the last year, the number of savings accounts that beat inflation for basic-rate taxpayers has dropped successively from 91 to absolutely none, which leaves savers in an impossible position," said Sylvia Waycot from Moneyfacts.


The data means that the Governor of the Bank of England, Mervyn King, has had to write to the Chancellor of the Exchequer, George Osborne, to explain why inflation is above the 2% target.

Declan Curry finds out whether inflation is sweet or sour

"The current high level of inflation reflects the increase in the standard rate of VAT earlier this year, and previous steep increases in import and energy prices," wrote Mr King.

He said without these "temporary" factors, inflation would be below the 2% target.

The Bank of England has said it expects the rate of inflation to drop in 2012 as prices fall back and the impact of the government's increase in VAT is no longer felt.

The British Chambers of Commerce (BCC) said supermarkets lowering their prices suggested the worsening economy was also pushing prices down.

"This confirms that weak consumer demand is forcing some businesses to reduce their margins," said chief economist David Kern.

"Falling petrol prices also contributed to the decrease, and we expect weak global growth to reinforce downward pressures on energy and commodity prices over the next year," he added.


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  • rate this

    Comment number 74.

    The trouble with the BofE type attitude is that even if inflation drops later my saving are still devalued by then. Fools that they were they did everything to avoid the right things, and let us have as much deflation as we get inflation to balance out the effects to us! Got to preserve the rich's asset values after all. No desperately needed halving of house prices here.

  • rate this

    Comment number 73.

    So which figure is Mr Osborne going to use this year? Traditionally it has always been September but that was inconveniently high so the Government are refusing to commit to it. So much for the triple gaurantee. I would love to have 5% inflation on my shopping basket but then i don't buy many white goods and do buy food, heat and lighting. 5%? According to the ONS calculator it is nearer 7% for me

  • rate this

    Comment number 72.

    You're hysterical; calm down, go to the ONS, find out how it works.

    I didn't think it was that funny but, "Do you really think they will tell me the truth"? ;)

  • rate this

    Comment number 71.

    I do like the phrase "....inflation to drop in 2012 as prices fall back and the impact of the government's increase in VAT is no longer felt" Wrong, the impact of the VAT increase will no longer be a component of the inflation figures , true, however it will most sertainly be "felt" as we will still be paying it, probably forever

  • rate this

    Comment number 70.

    Remember folks - this inflation figures EXCLUDES all the things you need to buy everyday.

    On the brightside - when you get a pay rise in 2018 - you will find that DVD's are proportionately cheaper.
    ...that's if you survive until 2018 - many cold winters yet - much heating bill rises to come...

  • rate this

    Comment number 69.

    This is as predicted.
    Peak in the Autumn and then continue down in 2012 as outside market factors reduce.
    Inflation is also a macro economic tool that can assist in debt reduction, if handled correctly
    Typical 'lefty' doom and gloom and spin from the BBC.
    You dont think we will ever let La La Labour get their hands on OUR finances again do you?

  • rate this

    Comment number 68.

    5% is still double the BofE target.
    And its a lot more than the raise most people will be getting to their pay this year... and last year.... and the year before when it became clear how clueless Gordon Brown really was.

  • rate this

    Comment number 67.

    Savers are paying much of the price of this crisis. If you never save, max out your credit card and expect to bailed out by the taxpayer when you're old, you're doing the same as lots of other people, many of whom blame everyone but themselves.

    Oh, silly me. It's all down to the greedy bankers, isn't it?

    We've ALL been living on tick!!! Especially including the last NuLab government.

  • Comment number 66.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 65.

    Deliberate dereliction of duty by the State. We need proper interest rates 7% or so. Stop pandering to the greedy bad borrowers and stealing from the good life long solvent. Your low rates have not done any good whatever have they! Because it is the wrong way to go. It is obvious, low rates caused the problem lower ones will never fix it!

  • rate this

    Comment number 64.

    The excitement is just too much for me.............

  • Comment number 63.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 62.

    It appears that the best Mervin King can come up with is that by next year "the impact of the government's increase in VAT is no longer felt." Apparently we have got used to the higher rate of taxation, so it's alright. Idealogically this Gov't has decided to tax the lower paid at a higher percentage of usable income rather than ensure the rich cannot avoid (or evade) taxation.

  • rate this

    Comment number 61.

    I am so thrilled that inflation has come down from 5.2% to a mere 5% and this calls for a street party. I will splash out the 0.2% saving on the best bottle of bubbly that money can buy and hire the Grimethorpe Colliery Brass Band. Let's all celebrate and dance the night away.

  • rate this

    Comment number 60.

    Inflation is a good indicator at how good or poor a country is being governed. 5% is extremely bad. Britian needs leaders not spineless ex public school boys.

  • rate this

    Comment number 59.

    So the Bank of England has missed its inflation target for nearly 2 years now.

    Mervyn's punishment...? Oh yes, he gets a Knighthood.

  • rate this

    Comment number 58.



    Patronising and arrogant is what I say I to that as a simple calculation on your Tesco shop will prove it's 9% at least - and even that's based on spaghetti hoops and beans on toast!!

    And you know something, I actually feel sorry for you people with your mortgages and loans hanging on for dear life. You think it's bad now?! Get a grip.

    I'm 26 and today I give up on Britain.

  • rate this

    Comment number 57.

    Please tell me the pound notes of this inflation not a percentage. This keeping it as a percentage hides the real value and hides how much we loose out when pay rises come in. 5 percent of 18000 is not the same as 30000 plus. we all need the same basics.

  • rate this

    Comment number 56.

    "Every month since they have been in they have told us, 'growth is up' only for two weeks later to be 'rounded down' i.e. the true figures, it's something to do with the 'feel good' factor!"

    No, it's to do with 3 different measurements. Each require different information, which becomes available at different times.

    You're hysterical; calm down, go to the ONS, find out how it works.

  • rate this

    Comment number 55.

    The CPI is a false figure.

    The RPI is the genuine figure.

    Terminate the CPI and retrospectively correct all underpayments of index linked pensions etc.


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