- Bank of England
Britain's inflation unexpectedly rose last month from the lowest level in five years as transport prices declined less than in the previous year. Consumer prices increased an annual 1.3% from 1.2% in September, according to the Office for National Statistics. The ONS reported food and non-alcoholic beverages dropped 1.4%, marking the longest streak of falling prices for those goods since 2000 due to supermarkets' price war. The core CPI, which excludes volatile components such as food, energy, alcohol and tobacco, remained unchanged at 1.5%.
Inflation in Britain has been slowing sharply in the last 12 months and is projected to remain subdued below the official 2% target for the next three years, according to the BoE's latest forecasts. The BoE said last week that inflation might drop to below 1% over the next six months and it expected annual price growth to reach its goal of 2% only towards the end of a three-year outlook period. As for the medium-term outlook, the central bank expects the CPI rate to stay at around 1% in the beginning of 2015, before inching higher to 1.1% in the second quarter. It then projects inflation at 1.6% in the first quarter of 2016, down from the 1.7% it estimated in August. Subdued inflationary pressures also allow the BoE to keep its monetary policy highly accommodative for the nearest future as both external and internal price pressures remain benign.
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