-Oct CPI +0.5% m/m; +2.7% y/y vs Sep +2.2% y/y;

LONDON (MNI) – Consumer price inflation bounced back in October to
its highest level for five months, pushed higher by tuition fees, food
and transport figures from National Statistics showed Tuesday.

While the rise in university tuition fees was flagged there has
been strong upward pressure from food prices as well as airfares and
second hand cars. Some of these effects could be seen as one-off,
although a rise in core inflation to 2.6%, the highest since December
2011, is another factor weighing against further monetary stimulus from
the Bank of England for now.

The BOE forecast CPI inflation to stand at 2.19% in Q4 as a whole
and this latest outturn makes this look too optimistic, especially as
utility prices push the CPI up over the coming months.

The CPI rose 0.5% on the month and was up 2.7% on the year in
October, up from 2.2% in September, the highest since May 2012. Analysts
had expected a smaller increase of 0.3% on the month and 2.4% on the

Education added 0.32 percentage point to CPI inflation, due to a
rise in university tuition fees.

Food prices added 0.16 percentage point with National Statistics
citing the worst domestic yields for potatoes and carrots in living
memory having pushed up prices.

Transport prices added 0.08 percentage point, due to second-hand
cars and airfares.

The main downward contributions came from housing and household
services and recreation and culture which cut inflation by 0.06 and 0.05
percentage point respectively.

-London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

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