According to Russ Mould, investment director at AJ Bell, whether the actual number is plus or minus 0.1% or 0.2% is broadly irrelevant.
“It is hard to see anything coming out of these figures that will persuade Governor Mark Carney and the Monetary Policy Committee a hike in borrowing costs is needed at either of their two remaining meetings for this year.
He added: “If oil stays above $50 (or even creeps higher) that could fuel a little inflation but Governor Carney will be aware that there are three hugely deflationary trends at work in the Western World today: Debt, demographics and the internet.
Nutmeg CIO, Shaun Port, however, says the Bank of England should be concerned about what lurks beneath the surface.
“Worryingly for the Bank of England, the forces keeping external costs low have dissipated in the last few weeks. Crude oil prices are up almost 20% on their August low. Soft commodities (coffee, cocoa, sugar, corn, wheat, soybean and fruit) are up almost 10% month to date. And broad UK currency depreciated almost 4% since August peak, so the strong sterling is no longer dampening inflation.”
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. At present we expect inflation to remain low for the rest of the year but we could see it start to rise again in the new year as fuel prices recover.”
According to the ONS, consumer price inflation slipped from 0% to -0.1%, dragged down by the ongoing pressure on food and fuel prices, as the gap between goods and services widened to its largest since 2003.
In the year to September 2015, the 12-month rate for goods inflation stood at a -2.4%, while services inflation was 2.5%, a gap of 4.9%, more than double the 2.2 percentage point difference in September 2014.
Digging further into the numbers, food prices fell by 2.5% and prices of motor fuels fell by 14.9%, by far the largest two fallers, the ONS said.
Prices of fuels and lubricants, which form part of the transport category, fell 2.9% between August and September, compared to a smaller, 0.6% in the comparable period in 2014.
Gas prices, which form part of the housing and household services category slipped 2.1%, they were flat in the comparable period in 2014.
The other major factor was the price of clothing and footwear. While prices rose 2.8% between August and September, this was much lower than the 4% rise recorded in 2014.
Indeed, the ONS added: “Clothing prices, overall, always rise between August and September. However, this was the weakest growth since 2008, with a higher proportion of clothing items on sale in September 2015 when compared with September last year.”
