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The latest monthly report by the Office for National Statistics (ONS) has revealed that the UK’s Consumer Prices Index (CPI) inflation rate remained negative in October at -0.1%.
A rise in the price of clothing was more than offset by falls in food, alcohol and tobacco prices. Food and drink prices fell by 2.7% in October while energy costs were down 4.1%.
Fuel prices fell by 14% annually, and the October figures mark the first time the CPI has fallen on an annual basis for two months in a row since it was created some eighteen years ago.
It is the ninth consecutive month that inflation has been at or very close to zero.
Expectations of an imminent rise in interest rates are already very low, following the Bank of England’s announcement earlier this month that inflation was unlikely to hit its 2% target within the next two years, and the latest ONS figures will do nothing to raise those expectations.
Meanwhile, savers in Government-backed ISAs have seen their interest rates cut, further reducing the value of tax-free savings.
On Monday the NS&I reduced the annual interest rate on its Direct ISA from 1.5% to 1.25%. The cut will affect over 400,000 investors in what was, until recently, one of the most generous ISAs on the market.