Inflation Falls Sharply on Ofgem Price Caps.>

UK DATA: Inflation Falls Sharply on Ofgem Price Caps

-UK Oct CPI +1.5% y/y vs +1.7% in Sept, lowest since Nov 2016

-UK Oct Core CPI +1.7%, unchanged from Sept

-UK Oct RPI +2.1% y/y vs +2.4% y/y in Sept, lowest since Oct 2016

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The implementation of energy price caps at the beginning of October 

accounted for the bulk of the decline in consumer price inflation, 

shaving 0.22pp from the change in CPI. Core CPI recorded no change in 

October, remaining well below the Bank of England's target rate of 2.0%. 

The sterling effective exchange rate rose by 2.2% between September and 

October, bringing the gain over the past two months to 4.7%. Given the 

reduced scope for imported inflation, CPI could fall further in months 

to come, reaching the 1.25% forecast in the BOE's MPR before Q2 2020.