The Consumer Price Index including owner-occupiers’ housing costs (CPIH) rose by 6.3% in the 12 months to September 2023, the same rate as in August.
On a monthly basis, CPIH rose by 0.5% in September 2023, compared with a rise of 0.4% in the same month last year.
Likewise, the Consumer Price Index (CPI) rose by 6.7% in the 12 months to September 2023, the same rate as in August.
On a monthly basis, CPI rose by 0.5% in September 2023, the same rate as in September 2022.
The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from food and non-alcoholic beverages, where prices fell on the month for the first time since September 2021, and furniture and household goods, where prices rose by less than they did a year ago.
Rising prices for motor fuel made the largest upward contribution to the change in the annual rates.
Core CPIH, excluding energy, food, alcohol and tobacco, rose by 5.9% in the 12 months to September 2023, the same rate as in August; the CPIH goods annual rate fell slightly from 6.3% to 6.2%, while the CPIH services annual rate rose from 6.1% to 6.3%.
Core CPI, excluding energy, food, alcohol and tobacco, rose by 6.1% in the 12 months to September 2023, down from 6.2% in August; the CPI goods annual rate fell slightly from 6.3% to 6.2%, while the CPI services annual rate rose from 6.8% to 6.9%.
Reaction:
Neil Rudge, head of enterprise at Shawbrook:
“For business owners this is an encouraging sign, especially as in our recent research inflation and the rising cost of living were cited as the biggest concern (70%) for SMEs over the next twelve months.
“Yesterday’s news that wages rates are simultaneously increasing does mean that labour costs for SMEs are on the up however since inflation is steadying , the increase might be less than what it would be in a higher inflation environment.
“This could lead to improved profit margins for SMEs as they can adjust their prices more easily, without facing rapidly rising costs.
“With growth on the agenda for many SMEs over the next twelve months, many will feel more confident to start these plans in earnest.
“Whatever their plans, finance will be a key component and lower inflation and higher wage rates can create a more stable economic environment.
“This stability could make it easier for SMEs to access financing, as lenders and investors may have more confidence in the business climate.
“While it’s still a challenging environment and prices are still increasing by 6.7%, a declining inflation environment does reduce the risk of rapidly eroding the value of borrowed funds, making it less expensive for SMEs to finance their operations or expansion.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“It was widely reported earlier this week that economists expected inflation to have gone down again this month.
“Although, when prices at the petrol pumps have been going up, that was quite a bold prediction. Given those particular rising costs today’s figure from the ONS is welcome news.
“We also heard yesterday that average wages are now increasing ahead of inflation. Average being the operative word here.
“There will still be those where the average has no bearing on their circumstances. For this section of borrowers in particular, the current rate of inflation and base rate situation is still worrying.
“Recently lenders have been accused of oneupmanship as they reduce rates in the battle for business in the last few months of the year.
“Nevertheless, seeing rates closer to four per cent than six, may tempt some that have been waiting it out.
“How long these rates will be around is anyone’s guess, so now could be the time to fix while the going is perhaps not good, but better.”
David Hollingworth, associate director at L&C Mortgages:
“Inflation holding steady will be seen as a little disappointing although only a modest fall was expected after the climb in fuel prices provided upward pressure.
“Given the expectation is for inflation to fall more sharply as the year goes on this may have little impact on mortgage borrowers, despite not being as positive news as hoped for.
“Unless the markets see this as changing the likely direction for base rate it is likely to be a case of steady as it goes.
“Fixed rates have been falling since the outlook for base rate eased and following the decision to hold base rate in September.
“Although rates have continued to edge down, the pace of those changes has slowed.
“Borrowers that are holding out for lower rates as they approach the end of their current deal may be better to secure a rate and then keep a close eye on rates over time.
“That will still allow them to take advantage of any further falls but allow them to lock in a fix up to six months early.“
Julian Jessop, economics fellow at the Institute of Economic Affairs:
“Despite the disappointing inflation data for September, the Bank of England should now be thinking about cutting interest rates, not raising them again.
“The bigger than expected fall back in August means that inflation is still lower than the Bank had been forecasting. Economic growth has been weaker too.
“A large drop is baked in for October. The reduction in the Ofgem cap on domestic energy bills will knock more than one percentage point off the headline rate this month.
“Above all, money and credit are now both shrinking, adding to the risks of recession and ensuring that inflation has a lot further to fall.”
