ONS consumer price index: Pound tumbles as United Kingdom slips back into negative

In the eurozone, where the European Central Bank fired up a fully-fledged program of asset purchases earlier this year, the rate slipped back into negative territory in September. The rate of inflation has been at or around zero for most of 2015.

The ONS said inflation was also dragged in to negative territory last month as seasonal price rises in fashion and footwear shops were more muted, while household gas prices also fell by 2.1 per cent over the period.

Last month, the ONS said CPI eased back to zero in August, from 0.1 per cent in July.

Adrian Lowcock, Head of Investing at AXA Wealth, pointed out: “As we enter the end of the year the big falls in the oil price at the end of 2014 will work their way out of the numbers changing the role of oil from having a deflationary effect to an inflationary one”.

SABMiller (SAB) 3,949.50p +9.06%.

Over the past year, prices for everyday goods have fallen by 0.1 per cent, the Office for National Statistics said.

IHS Global Insight Economist Howard Archer said, deflation is likely to prove brief and marginal and it is highly unlikely that consumers will be tempted to start delaying purchases in anticipation of falling prices.

Even as the official data show that overall consumer price inflation inched up to 4.4 per cent in September from 3.7 per cent in August, Citi Group researchers found that the price-rise was largely concentrated in pulses and onions.

He added: “While the impact of rising wages remains notable by its absence in the inflation figures, I expect the Bank of England to focus on the risks and exercise caution on interest rates”.

Despite adverse base effect, build-up of inflation on key items in CPI has been lower than past year. This reflected in the notable 4.3 percent jump in food inflation in September, double the pace of the month before.

“The main downward pressures on CPI came from clothing, which rose more slowly this September than in recent years, and falling petrol and diesel prices”. “Food prices in particular have had a miraculous run…Despite two successive droughts, they continue to remain benign, thanks to an intriguing web of spatial distribution of rains, soft global commodity prices and prudent government policy back home”.

At the same time, input prices increased for the first time in five months in September.

A sustained period of mild “disinflation” is likely to deter the Bank of England’s rate-setters from finally starting the gun on an interest rate rise, said Vicky Redwood, at Capital Economics.

India’s factory output as well as retail inflation accelerated in August and September, respectively, indicating gradual economic recovery and building pricing pressures in the economy.

However, Ben Brettell, senior economist at online stock broker Hargreaves Lansdown, said interest rates could remain lower for longer.