UK inflation accelerated more-than-expected to a three-month high in October driven by higher clothing and food prices, the Office for National Statistics reported Wednesday.

Consumer prices advanced 0.7 percent on a yearly basis in October, faster than the 0.5 percent increase logged in September. The rate was forecast to rise marginally to 0.6 percent.

Although inflation was the highest in three months, this was well below the Bank of England’s target of 2 percent.

The BoE expects inflation to remain at, or just above 0.5 percent during most of the winter, before rising quite sharply towards the target.

Month-on-month, consumer prices remained flat versus a 0.4 percent rise in September, and the expected drop of 0.1 percent.

Excluding energy, food, alcoholic beverages and tobacco, core inflation increased to 1.5 percent, while the rate was expected to remain unchanged at 1.3 percent.

Data revealed that prices of food prices increased in October from the previous month, but fell in the same period last year, due to higher demand for vegetables and fruits ahead of second lockdown.

Another report from the ONS showed that output prices declined for the eighth consecutive month in October.

Output prices decreased 1.4 percent annually but slower than the 1.7 percent drop seen in September. However, this was faster than economists’ forecast of 0.7 percent fall.

Output prices remained unchanged on month, in contrast to a 0.1 percent drop a month ago and a 0.1 percent rise expected by economists.

Input prices also continued its downward trend in October. Input prices were down 1.3 percent on year following a 2.2 percent decline a month ago. Prices were expected to decrease 2.5 percent.

Month-on-month, input prices gained 0.2 percent after rising 0.3 percent a month ago. Inflation was forecast to slow to 0.1 percent.

The material has been provided by InstaForex Company – www.instaforex.com

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