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Inflation stalls as clothing prices fall

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Inflation remained unchanged at 2.4% last month with the cost of living increase held back by falls in the prices of clothes, official figures show.

Economists had been expecting the consumer prices index (CPI) measure of inflation to edge up to 2.5% as household utility bills and petrol prices climbed.

But instead, CPI remained steady, according to the figures from the Office for National Statistics (ONS) – meaning a little more spending power for households to add to the boost from the uptick in wage growth.

ONS head of inflation Michael Hardie said: “Prices paid by consumers continued to rise at a steady rate with falls in food and clothing offset by rising utility bills and petrol, as crude prices continued to rise.”

October’s inflation figures come a day after the ONS reported that average weekly earnings were rising by 3.2% year-on-year over the July-September period, the fastest pace in nearly a decade.

The latest CPI data showed menswear and footwear pulled clothing prices lower while falling costs of products such as yoghurts and cheese kept a lid on food inflation.

But petrol and diesel prices were higher.

The Bank of England will face pressure to raise interest rates if it sees the prospect of inflation spiralling higher. It targets a CPI rate of 2%.

But the outlook is heavily dependent on the outcome of Brexit negotiations, with a no-deal scenario likely to mean a further plunge in the value of the pound – which would drive up import costs – and a squeeze on supply.

The Bank has suggested these inflationary factors could push it to lift interest rates even if the UK faces a growth shock in the event that it should crash out of Europe without agreement.

However a Brexit deal is still seen as the most likely scenario by policy makers, and one which would be expected to see interest rates raised more aggressively.

(c) Sky News 2018: Inflation stalls as clothing prices fall