Inflation may have peaked, but don't get too excited yet

It could go up again next month, but as things stand this is welcome news for mortgage holders

- James Moore

The cheers that followed UK inflation pulling the first surprise for several months could be heard up and down the country.

To the delight of many, it has held steady on the downside at 3.8 per cent. The Reuters consensus forecast of economists predicted a rise to 4 per cent, as did the Bank of England. Prices are still rising at an uncomfortable rate and this has been causing real pain. Too many people will face the invidious choice of heating or eating this winter. So while it’s good news that inflation hasn’t gone any higher, and may even have peaked, the damage has been done. It’s still being done.

Food price inflation finally eased in September, for the first time since March, according to the official data. The food and nonalcoholic drinks category that feeds into the Consumer Prices Index (CPI) eased to 4.5 per cent for the year to September, down from 5.1 per cent in the year to August.

But that good news only goes so far. Inflation’s percentages are cumulative.