United Kingdom inflation remained negative at -0.1% in October

The consumer-price index, which measures what Americans pay for everything from medical services to meat, rose a seasonally adjusted 0.2% in October, after two months of declines, the Labor Department said Tuesday.

Inflation is not decelerating and there could be a real shocker come early next year as the huge declines in energy prices disappear: It is possible that the year increase could be above 1.5 percent in January, not the 0.2 percent rise in October.

The so-called core CPI, which strips out food and energy, also rose 0.2% after a similar increase in September. Core prices have risen 1.9% on the year, driven by increases in the cost of shelter and medical care.

The CPI news further dampened expectations of a rise in interest rates any time soon.

Analysts have been eyeing inflation to see whether it will show enough strength to justify the Federal Reserve embarking on its first increases in interest rates in more than nine years.

The October index for bread was 179.2, down 0.2% from September but up 2% from October 2014.

Rob Wood, an economist at Bank of America Merrill Lynch, said: “Petrol is the main reason why we are confident that inflation has [bottomed out]”.

A fall in the cost of food and beverages as well as alcohol and tobacco, both of which decreased by 0.4 per cent between September and October, also contributed to the decline in inflation.

Falling food prices are behind a few of the overall fall in inflation to negative territory.

So “core” consumer prices aren’t as weak as the headline index. The index climbed 1.99% to 6,268.76 with engineering company Smiths Group up 10% while Rolls Royce climbed 5% and BAE Systems up 2%.

Retail price inflation fell to 0.7 percent in October from 0.8 percent in September, marking the weakest RPI reading since November 2009. Energy prices have fallen by 17.1 percent over the last 12 months.

BoE governor Mark Carney has already said that it is likely the inflation rate will pass 1% before the second half of 2016. Inflation without food or energy prices considered increased 0.2% for the month. Again, this increase in the annual rate will reveal more about what was happening this time previous year than it does about current price pressures. At first sight, nothing to write home about it, but that first impression changes dramatically when we dig deeper into the numbers in the context of inflation generation.

Policy makers have said they’ll need to be convinced that overall inflation is on a stable path before raising the benchmark interest rate.