Inflation remains stubbornly high in September


Inflation has stayed put at 2.7 per cent in the year to September, despite analysts forecasts of a softening to 2.6 per cent. The pound has slipped against the dollar on the news.

The largest contribution to the consumer price index measure came from air fares, which was offset by a downward contribution from petrol and diesel prices.

Jeremy Cook of World First suggests that the air fare pressure is a "possible function of cuts to air fares last year as travel companies enticed people to leave the UK after a month sat watching the Olympic and Paralympic games."


Despite the prolonged period of above target inflation, some market watchers are optimistic about the future. Rob Wood of Berenberg says that "the return of productivity growth will keep inflation under control and allow real wages to start rising again in the second half of next year."

Other measures softened slightly, as the retail price index dropped from 3.3 per cent to 3.2 per cent in the year to September, in-line with predictions.