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UK inflation remains stubbornly below target

Wednesday, October 21, 2020

The UK consumer price inflation (CPI) measure came in on an annualised basis in September at 0.5%, in line with estimates but still some way off the Bank of England’s (BoE) 2% target rate. Transport costs and restaurant prices edged higher as the ‘Eat Out to Help Out’ scheme came to an end and accounted for the largest contributions to the overall inflation rate. A weakening pound sterling will inevitably result in higher imported inflation but we are not seeing that just yet. We see a diverging currency story developing between the US dollar, euro and pound with GBP falling more against the euro as intractable trade discussions between the two blocks continue. Either way inflation continues to remain stubbornly below target.  

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