UK inflation: Negative CPI for second month as food and transport prices weigh down rate

The UK inflation rate was negative again in October, reported the Office for National Statistics (ONS). At -0.1% it was the same as in September, meaning this is the first time in 2015 the inflation rate was below zero for two months in a row.

Falling transport and food prices weighed down the rate, which has been far from the Bank of England's 2% target. The negative inflation will likely cause the Bank's Monetary Policy Committee to postpone an increase in interest rates.

BoE governor Mark Carney has already said that it is likely the inflation rate will pass 1% before the second half of 2016. The policy makers are hoping for a 2% inflation rate in 2017 and are also looking for employment figures when it comes to interest rate decisions.

"For now the UK's weak inflation rate is largely due to external factors - persistently weak global demand and a strong pound pushing down commodity prices," Maike Currie, associate investment director at Fidelity commented.

"However, as the Bank of England's chief economist Andy Haldane points out, over time these pressures should wane, and the key factor that will determine the future path of inflation will be domestic costs, specifically labour costs."

A healthy sign for the high street was that clothes and footwear prices were up 0.07%, while students also wore the burden, with education costs rising. Restaurant prices endured the biggest increase in the year and lifted up the inflation slightly.

Inflation is based on a basket of goods and services, measuring the average price across the board of those products. Each year, the basket is updated.