Annual CPI inflation 2.7% in October 2012, up from 2.2% in September
Annual RPI inflation 3.2% in October 2012, up from 2.6% in September
Commenting on the inflation figures for October 2012, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:"The larger than expected inflation increase was mainly due to higher university tuition fees and upward contributions from food, non-alcoholic drinks and transport. With higher utility prices now in the pipeline, it is possible that annual consumer price inflation will rise again above 3% in the next few months, before falling during 2013.
"Higher inflation is unwelcome news for the UK economy at a time when the government is persevering with its tough austerity plan. In the face of major economic challenges, there is only limited scope for the UK to rebalance towards exports and investment over the next year. In these circumstances, the boost to real incomes resulting from low inflation could be one of the main factors for underpinning domestic demand in 2013.
“We believe that the Bank of England should not use additional QE to limit expected falls in inflation over the coming months. Even if it falls temporarily below the 2% target in 2013, this should not be resisted. Instead, the MPC and the government should concentrate on measures that support growth directly and boost lending to businesses."