'Falling transport costs behind UK inflation drop'

A leading economist says falling transport costs are behind the UK's steep drop in inflation after the Bank of England announced that inflation had plunged from 4.6 percent to 3.9 percent in October.

The Office for National Statistics said cheaper petrol was also a contributing factor to a steeper fall than forecast. A fall to around 4.4 percent had been predicted.

The current rate of inflation is the lowest it's been in the UK since September 2021 and now matches the headline rate in France. 

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"If we are looking at the contributing factors, the big one is the cost of transport," Nina Skero, Chief Executive of leading economics consultancy, Cebr, told CGTN Europe.

"It's a category that's seen a lot of upward pressures on the supply side, which are now starting to ease. So we have seen that category come down quite a lot more broadly."

The Bank of England has set an inflation target of 2 percent, enabling consumers to better plan their spending. 

But while many sectors are now heading towards that target, inflationary pressures in others are preventing the headline figure from dropping even further.

Skero added: "The inflation across all goods categories as a whole is actually at the Bank of England's 2 percent target. What's keeping combined CPI up there still, is actually services inflation. 

"And what's feeding into that are higher wages. And of course, for services, labor is a particularly important input. So what led to the drop is primarily transport and, more broadly, a lot of the goods categories."

UK citizens have faced a difficult year, with rising energy bills, surging food costs and soaring mortgage rates making it difficult for them to make ends meet. 

But with inflation dropping, does that mean people can look forward to falling prices and less pressure on their wallets?

"It's certainly true here that things are going in the right direction now," says Skero. "Can people breathe a sigh of relief? It depends on your interpretation of inflation as a whole.

"A falling rate of inflation still means that things are generally getting more expensive. It's not a case of us seeing deflation overall, which would mean that prices are actually declining. 

"We also don't know how sustained this will be. In January we're going to have the annual change in energy price. And we could very easily see that pushing goods inflation upward again. Falling inflation is a sigh of relief, but we're not out of the woods just yet."

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