Inflation likely slowed to 6.5% in September in spite of rising fuel costs, analysts said.
Though oil and gas prices have soared in recent weeks over concerns of an uptick in demand next year coupled with squeezed supply, slowing food price rises likely mitigated inflation.
According to economists cited by Refinitiv, this should see the Office for National Statistics (ONS) on Wedneday report 6.5% growth in the UK’s consumer price index (CPI) for September, down from 6.7% in August.
British Retail Consortium (BRC) data has shown that food prices increased by 9.9% in September, marking the slowest jump in roughly a year.
This has likely helped to ease the impact of rising fuel prices, with Brent Crude up 3.6% and gas by a hefty 50% to 130p per British thermal unit since early September.
Forecasts of growing demand in the coming year by the International Energy Agency (IEA) and the Organisation of the Petroleum Exporting Countries (OPEC) have been met with concerns over future supply.
Given OPEC’s ongoing cuts to production have already led to an increase in prices, the outbreak of war between Israel and Hamas has put further upward pressure on prices over the past week.
“The longer the conflict goes on, or the more widespread it becomes, the greater the upside risks to inflation,” Capital Economics economist Ruth Gregory pointed out.
A weakening of the UK jobs market prompting slower wage growth will likely have helped to keep inflation down, analysts added, leaving many expecting the Bank of England to hold its base interest at 5.25% in November’s rate call.