UK inflation drops to 5%

Consumer Prices Index (CPI) inflation dropped to 5% in October, down from 5.2% the previous month, the Office for National Statistics said today.

The drop was bigger than expected, with markets pricing in a fall to 5.1%. Meanwhile RPI fell to 5.4%, from 5.6% in September. The ONS said the largest downward pressures came from falls in the cost of food (due to significant and widespread discounting by supermarkets and good harvests for certain produce), air fares and petrol. Partially offsetting these falls were upward pressures from increases in the cost of clothing, electricity and gas. Last month the CPI index hit a record high of 5.2%, equalling the previous high set in September 2008. The Bank of England's target rate for...