MNI 5 THINGS: CPI Last Lower 18 Months Ago; Confounds Analysts

By Jamie Satchi, Jai Lakhani and Laurie Laird

     LONDON (MNI) - The following are the key points from inflation data

published Wednesday by the Office for National Statistics.

     - Consumer price inflation decelerated dramatically to an annual rate of

2.4%, falling well short of analysts' expectations, but matching the Bank of

England staff forecast for September.

     - As predicted by MNI, the decline in CPI was driven by the unwinding of

one-off factors and base effects. Recreation and culture, transport and food

prices all came off in September, cumulatively accounting for -0.26pp of the

overall change.

     - Upside pressure was provided by higher energy prices after tariff hikes

were implemented by selected utility suppliers (Sep 17 saw no tariff hikes).

Electricity prices were up 9.3% y/y in September, the highest 12m rate since

September 2011.

     - House price growth eased to 3.2% y/y in September, a five-year low,

driven in part by a continued slump in the capital. London prices were down 0.2%

y/y and have only increased once in the past six months.

     - Fuel costs have remained in check, despite the sharp annual rise in crude

oil prices over the past several months. While fuel costs tend to rise less

dramatically than crude oil, the recent rise in energy prices may yet feed into

higher transport costs.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$B$$$,M$E$$$]