Surprise fall in inflation

The headline rate of inflation fell in October from 3.3 per cent to 3.1 per cent, the Office for National Statistics announced today.

The headline rate of inflation fell in October from 3.3 per cent to 3.1 per cent, the Office for National Statistics announced today.

The underlying rate of inflation, excluding mortgage interest payments, fell from 2.2 per cent to 2.0 per cent.

The City was suprised by the extent of the fall, which has implications for interest rates as underlying inflation is used by the Bank of England in its calculations.

The ONS said the main cause for the fall was a drop in forecourt petrol prices.

But uncertainty remains over crude oil prices and there are also warnings that recent floods could affect food prices, with potatoes affected particularly.