UK CPI forecast to ease to 3.6% in October from the 3.8% peak

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The United Kingdom (UK) Office for National Statistics (ONS) publishes the highly relevant Consumer Price Index (CPI) data for October on Wednesday at 07:00 GMT. The market consensus anticipates some moderation of inflationary pressures. UK consumer inflation is a key release for the Bank of England (BoE) and tends to have a significant impact on the Pound Sterling (GBP). The central bank’s Monetary Policy Committee meets on December 18, and market speculation about the possibility of an interest rate cut has been on the rise over the last few weeks. What to expect from the next UK inflation report? The UK headline Consumer Price Index is forecast to have eased to a 3.6% annual rate in October, after having remained at 3.8% YoY in the previous three months. This is the strongest consumer inflation level since January 2024, and nearly double the BoE’s 2% target for price stability. Month on month, UK CPI inflation is expected to have accelerated 0.4%, after a flat reading in September. Lower food and energy prices are seen as the main reasons for lower consumer prices. Costs for food and non-alcoholic drinks eased in the second half of the year, following sharp increases on products such as chocolate, coffee, cheese, and eggs earlier in the year. Energy bills have also grown at a slower pace, with Ofgem, the energy regulator for Great Britain, reporting a 2% increase in the year to October, compared to nearly 10% in the same period last year. Nevertheless, the UK core CPI, considered more relevant for the central bank as it strips off the seasonal impact of food and energy prices, is also expected to have slowed down in October. The yearly rate is seen decelerating to 3.4%, from 3.5% in September and extending its decline from July’s peak of…