Commenting on the October inflation figures issued by the Office for National Statistics, showing a rise in CPI from 2.2 percent in September to 2.7 percent in October and a rise in RPI from 2.6 percent last month to 3.2 percent this month, KPMG Economist, Tom Hooper, said:
“Hopefully October's sharp uptick in inflation proves to be just a blip being that it is driven at least in part by the increase in university tuition fees. But if it marks the beginning of a reversal in the recent downward trend it threatens to put a spanner in the works. After all, recent falls in CPI have raised hopes that the household sector will soon receive a boost as real wages start to grow again - for now at least those hopes have been put on hold.
“We will find out the path the Bank of England expects prices and growth to take tomorrow when it publishes its Quarterly Inflation Report. But the economy is already showing signs that it has failed to carry momentum from the summer into the fourth quarter. And the big picture is that output continues to do no more than bounce along the bottom as it has for the past couple of years. Continuing domestic headwinds, the threat of an escalation in the Eurozone crisis and only slow progress in rebalancing the economy mean the recovery is set to remain fragile. With this in mind and despite this month's inflation hiccup further monetary stimulus should be expected in the New Year.”
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Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.