UK September CPI +3.8% vs +4.0% y/y expected | investingLive

• Prior +3.8%
• Core CPI +3.5% vs +3.7% y/y expected
• Prior +3.6%

Well, that’s certainly a curveball as the readings underwhelm and are below estimates. Of note, services inflation was unchanged at 4.7% in core terms – even as the fall in prices for airfares this September wasn’t as marked as it was last September. On that front, airfares fell by ~29% this September as compared to the ~35% drop in September last year – which was the steepest since 2001.

The offsetting factor to the inflation equation last month is coming from food price inflation, which fell from 5.1% in August to 4.5% in September. And that’s a welcome sign for the BOE.

Given that the central bank had forecast that September should be the peak of inflation, these numbers suggest that perhaps they have scope to cut sooner rather than later. It might not be enough to compel a change in outlook for November but things will certainly get interesting now for the December meeting.