UK inflation remains at 3% in October
Food prices, clothes, transport (oil) and recreation biggest contributors
Tom Selby, senior analyst at AJ Bell, comments:
“UK household finances are being squeezed by a triple whammy of stubborn inflation, weak wage growth and higher debt costs in the form of rising interest rates.
“The weak pound continues to push up the costs of food, clothing and leisure activities while the rising oil price means transport costs are also marching higher. With average wage growth running at 2.2% and an interest rate hike starting to increase mortgage repayments for many, UK consumers will be starting to feel the pinch.
“The Governor of the Bank of England, Mark Carney previously said he expects inflation to peak around October and it’s not just the UK consumer that will be hoping he is correct.
“Philip Hammond will be acutely aware that the UK economy remains precariously balanced as he prepares for his first Budget since the election next week. UK retailers are also likely to feel the pressure if consumers are forced to reign in their spending in the crucial Christmas trading period.
“However, we are by no means at crisis point. The deflationary forces of consumer debt and the internet are still at work and are likely to prevent inflation running out of control. By historical standards 3% is relatively modest and the Bank of England still has plenty of scope to use interest rate increases to bring it back down towards its 2% target.”