Investing.com - Consumer price inflation (CPI) in the U.K. unexpectedly eased in October, missing forecasts for a larger increase, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation rose from the year before by a seasonally adjusted 0.9% last month, below forecasts for a gain of 1.1% and compared to the 1.0% increase seen in September.
Month-over-month, consumer price inflation rose by only 0.1% in October, compared to expectations for a 0.3% advance and the prior month’s 0.2% increase.
“The main downward contributors to the change in the rate were prices for clothing and university tuition fees, which rose by less than they did a year ago, along with falling prices for certain games and toys, overnight hotel stays and non-alcoholic beverages,” the ONS explained in the report.
“These downward pressures were offset by rising prices for motor fuels, and by prices for furniture and furnishings, which fell by less than they did a year ago,” it added.
Bank of England Governor Mark Carney will still have to write an open letter to the Chancellor of the Exchequer, Philip Hammond, as inflation is more than a percentage point below the central bank's target of 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.2% last month, below forecasts for a gain of 1.4% and compared to the 1.5% advance in September.
The retail price index (RPI) increased 2.0% in October, after rising by the same amount the previous month. Analysts had expected a gain of 2.2%.
Month-on-month, RPI was unchanged in October, compared to the prior month’s increase of 0.2%. Analysts had expected a 0.1% rise.
Core RPI increased at an annualized rate of 2.2% in October, matching the previous month’s advance.
Month-on-month, core RPI was unchanged, compared to September’s reading of a 0.2% advance.
The data also showed that the house price index rose 7.7% in October, above forecasts for a gain of 8.1% and following a 7.7% increase in September that was revised from an initial 8.4% advance.
In an immediate reaction, GBP/USD traded at 1.2410 from around 1.2451 ahead of the release of the data, EUR/GBP was at 0.8698 from 0.8677 earlier and GBP/JPY changed hands at 134.34, compared to 134.52 previously.
Meanwhile, European stock markets traded mixed. London’s FTSE 100 gained 0.92%, the benchmark Euro Stoxx 50 dropped 0.02%, France's CAC 40 traded up 0.42%, while Germany's DAX inched up 0.02%.