Inflation fell unexpectedly last month, according to figures from the Office for National Statistics on Tuesday, with the Consumer Prices Index (CPI) rising just 0.9 percent in October.
The figure was below the 1.1 percent predicted by economists and 0.1 percentage points below the 1 percent rise recorded in September.
However, the factory gate prices and the costs of raw materials rose much faster in October and prices for goods leaving factories rose by 2.1 percent, the biggest increase in 3 and a half years.
ONS statistician Mike Prestwood commented:
“After initially pushing up the prices of raw materials, the recent fall in the value of the pound is now starting to boost the price of goods leaving factories as well.
“However, aside from fuel, there is no clear evidence that these pressures have so far fed through to the prices in shops.”
Costs faced by producers for raw materials and oil recorded a record rise in October, seeing a 4.6 percent increase.
Tom Stevenson, investment director for personal investing at Fidelity International, said:
“The expected rise in inflation paused for breath today as higher fuel prices were offset by slower rises in the price of clothes and university fees and cheaper hotel stays.
“Against all expectations, the CPI rose by just 0.9 percent in the year to October, slightly lower than September’s 1% increase. However prices are still rising faster than at any time since late 2014. The rise in prices continue to be driven by sterling’s recent weakness which has raised the cost of imported fuel and food.
“Consumers can expect UK inflation to continue rising into next year as the impact of the pound’s slide continues to be felt. The conventional wisdom is that the Bank of England’s 2 percent inflation target will be left behind in 2017. “