Computer games and fashion prices boost inflation in bounceback after Covid 19 disruption

Inflation posted a surprise increase to 0.7% in October from the previous month’s 0.5%, official figures showed today.

The Consumer Prices Index showed a rise as clothing prices increased, returning to normal seasonal patterns after the disruption wrought on the industry by Covid-19 .

Food prices also “nudged up”, as did second hand cars and computer games.

“These were partially offset by falls in the cost of energy and holidays,” the Office for National Statistics said.

The price of goods as they leave the factory gate, known as producer prices, fell 1.4% against 1.7% in September, perhaps signalling the crisis hitting manufacturers could be easing.

Similiarly, the deflation in raw materials eased somewhat, coming in at  1.3% in the year to October against 2.2% in September.

Including people’s housing costs, the consumer prices index inflation rate was 0.9% October, up from 0.7% in September.

Recreation and culture were the biggest fallers as lockdowns prevented people in some areas of the UK accessing pubs, bars and other leisure activities.

Restaurants and hotels dropped prices markedly.

Despite the modest rises in the overall figures, inflation remains far too subdued to concern the Bank of England, although they will add to the weight of arguments against cutting interest rates into negative territory.

Hopes for a rebound in the economy now Covid vaccines are on the horizon might also help companies put up their prices to more sustainable levels.

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