LIVE: Industry reacts as inflation fails to drop for first time since February

11:54

Inflation will fall more gradually than expected - NIESR

Giving its reaction to the inflation news, the National Institute of Economic and Social Research’s -(NIESR) associate economist Paula Bejarano said: “Today’s data indicates that annual CPI inflation was 6.7% in September, unchanged from August, as downwards contributions, particularly from the food and non-alcoholic beverages category, were offset by price rises in motor fuels and transport.

“CPI fell marginally to 6.1% in September, down from 6.2% in August while NIESR’s measure of trimmed-mean inflation fell from 7.9% in August to 7.3% in September. Altogether, these data demonstrate that elevated underlying inflationary pressures continue to generate persistence in inflation, meaning it will fall more gradually than expected.”

11:37

The stability in consumer prices is putting pressure on the Bank of England to sustain high interest rates - Dun and Bradstreet

Dun and Bradstreet’s global chief economist Arun Singh believes the stability seen in consumer prices will put pressure on the Bank of England to sustain the current level of high interest rates. 

They explained: “The stability in consumer prices from August to September, along with a minor decrease in the core measure of inflation - which provides a more accurate gauge of underlying price trends - is putting pressure on the Bank of England to sustain high interest rates.

“The bigger picture though is that consumer prices are trending lower as we’ve seen a fall in inflation over the past six months and we’re likely to see softer prices over the next few months as tighter monetary policy continues to work through the economy.

“However, companies should continue to arm themselves with the knowledge and tools necessary to make smarter decisions. This is where quality data and the insights it provides businesses is essential, providing them with a competitive advantage and helping strengthen business resilience.”

10:43

Fuel prices play their part in the waveringly stubborn inflation position

A major reason why we’ve not seen a drop in inflation in September is almost because of movements in the price of motor fuels, with the average price of petrol rising by 5.1 pence per litre between August September - with it now standing at 153.6 pence per litre. 

This also contrasts to last September, where prices fell by 8.7 pence per litre - although prices were at 166.5 pence per litre in the month. 

Similarly, diesel prices rose by 6.3 pence per litre and now stands at 157.4 pence a litre. All this resulted in motor fuel prices falling by 9.7% in the year to September, compared to a fall of 16.4% in the year to August. 

Within transport, the effect from motor fuels was offset partially by downward effects from the purchase of vehicles and from air fares. Vehicle prices, meanwhile, were flat on the month compared with a rise of 0.5% rise a year ago. 

10:34 Stubborn UK inflation adds to interest rate worries

In their response to the news, Hargreaves Lansdown’s head of money and market Susannah Streeter said: 

“Inflation is staying obstinately high in the UK, adding fuel to fears that interest rates will have to stay in an elevated position – a pattern of worry that’s just reared up again in the United States.

“An unwelcome combination of worries about a worsening situation in the Middle East and concerns about high interest rates settling in, is unsettling investors.

“Prices had been cooling in the UK but instead of heading a small notch downwards as largely expected, the CPI headline rate of inflation came to an abrupt halt in September, as the impact of higher fuel prices fed through. Oil prices have surged again amid worsening violence in Israel and Gaza, with Brent Crude the benchmark heading above $91, adding to worries that inflation will stay stubborn.

“The door has still been kept ajar to another rate hike in the UK, but at the very least still untamed inflation is pushing any chance of a rate cut further back into next year. Higher crude prices are set to buoy London listed energy giants in early trade, while risk-averse sentiment creeps back.’’

10:27

Unchanged inflation signals the road ahead is "far from being without bumps" - Manx Financial Group

Douglas Grant, group chief executive of Manx Financial Group, meanwhile explained: “Following UK wages growing at a record annual pace, CPI inflation remaining unchanged signals that the road ahead is far from being without bumps and as SMEs account for around half of all private sector turnover in the UK, we need more innovative measures to ensure their survival.  

“It is more important than ever that SMEs take this as a reminder to review their existing lending structures and ensure they are prepared for further challenges. Recent research conducted by Manx reveals a significant shift in the financial landscape for SMEs.

“Compared to last year when only a quarter encountered obstacles, two in five SMEs have now either halted or slowed down some aspect of their operations due to a lack of external financing. Furthermore, the survey uncovered that 15% of SMEs in need of external finance and/or capital were unable to access the required funds. This scarcity of financial resources poses a substantial impediment to SME growth, necessitating immediate action to bridge the funding gap.

“The implementation of short-term loan schemes in the last few years has been positive but we believe that it is vital that the government continues to expand measures to fuel SME resilience and kick-start growth. We have been advocating for a permanent government-backed loan scheme that is sector-focused and involves both traditional and non-traditional lenders to secure the future of our SMEs.

“As concerns mount over the future of the economy, the significance of implementing a permanent scheme cannot be overstated, it could serve a pivotal role in sustaining economic recovery and in turn, determine the survival of numerous companies."

10:24

Stagnate inflation will cause "unease among small firms" Federation of Small Businesses

In response to the news, the national chair of the Federation of Small Businesses Martin McTague said: 

“This result will cause unease among small firms, who had been hoping that inflation’s recent downward trend would continue.

“With fuel price rises a major factor in stickier-than-expected inflation, small businesses will be nervous that higher pump prices could undermine their efforts to rebuild their finances in the wake of the cost of doing business crisis.

“These latest inflation figures will give little comfort to small firms who had hoped to see the base rate begin to fall as soon as possible.

"We hope the Bank of England will bear in mind that the full impact of its recent interest rate increases has yet to work its way fully through the system, and – with insolvency numbers this year due to hit heights last seen in 2009, following the global financial crisis – the risk of a downward spiral of closures and debt must be avoided at all costs.

“Small businesses will now be looking to the upcoming Autumn Statement for policies which will support them.

“Most pressingly, the 75% business rates relief for small hospitality, retail and leisure firms in England must stay in place past its March expiry date, as its loss will be devastating to those hard-hit sectors. A wider overhaul of business rates has long been promised and we are keen for it to materialise.

“We want to see a ‘kickstart’-style scheme focused on health brought in, to ease labour market shortages and help people fulfil their ambitions.

“There’s no economic recovery without small firms, and their concerns must be top of mind for policymakers who are serious about getting the economy going again.”

10:05

Month-on-month food price inflation falls

Broken down in more detail, food and non-alcoholic beverage prices fell by 0.1% between August and September, resulting in an easing in the annual rate to 12.2% - down from the 13.6% figure seen in the 12 months to August, as well as the recent high of 19.2% seen in March.

The major player in this drop came from the milk, cheese and eggs category - dropping by three percent from 15.3% to 12.3% between August and September. The cost of mineral waters, soft drinks and juices, where prices fell from 14.7% to 10.7%. 

Meanwhile, the only grouping the ONS measures that saw an increase came from fish - where the annual rate in prices went up from 6.8% to 8.7% between August and September. 

09:54

"The light at the end of the tunnel is still a long way away" - SmartSave

In response to the news, SmartSave founder and chief executive Andy Mielczarek said: “The light at the end of the tunnel is still a long way away. Inflation is proving very sticky, remaining at a level that will keep many households on their toes.

“Inflation does more to individuals’ finances than just increase the costs of their utilities and the weekly shop – prolonged periods of high inflation diminish the value of savings in real terms. Thankfully, we’re in a position now where higher interest rates mean opportunities to achieve competitive returns on savings.

“But crucially, as many consumers will be acutely aware, not all banks have been passing better rates on to savings customers, essentially triggering a ’loyalty penalty’ for savers who do not shop around.

“As inflation and interest rates continue to shift, the onus is on consumers to consider where best to put their money to maximise returns. The gap between the best and worst savings products is vast, so anyone with a reasonable savings pot must assess which providers and products can help them grow it.”

09:47

Little change in month-on-month inflation figures

Alongside the stagnate position of CPI and CPIH inflation in the 12 months to September, figures from the Office for National Statistics also suggest some stubbornness in the month-on-month CPI and CPIH figures, with the 0.5% rise seen across both roughly the same as the increase seen in August.

09:42

"Stubbornly high" inflation will do nothing to alleviate anxiety among millions of people - Money Advice Trust

Responding to the news that inflation remained at its 6.7% position in the 12 months to September 2023, the Money Advice Trust’s acting chief executive David Cheadle said: “Inflation remains stubbornly high and these figures will do nothing to alleviate the anxiety for millions of people already dealing with mounting debts. 

“Our advisers at National Debtline are hearing first-hand the impact that sustained high costs have had on struggling households.  

“With winter fast approaching, many people are once again facing impossible choices between turning the heating on or going without meals.  

“More action is needed to support households experiencing financial difficulty, including through a government backed ‘Help to Repay scheme to help with unaffordable energy arrears.”