Falling fuel costs keep UK inflation at lowest since 2016

Sliding fuel and second-hand car prices kept UK inflation at its lowest for almost three years in September, figures reveal.

Figures from the Office for National Statistics (ONS) show the Consumer Price Index (CPI) was 1.7% last month, the same as in August. The rate of inflation was last lower in November 2016.

The rate remained lower than predicted by analysts who had forecast 1.8%.

The monthly figure is used to decide the annual increase in business rates.

It also means pensioners will see a 4% increase in the state pension in October, more than double the rate of inflation.

The triple-lock rule for state pensions means the payout is the highest figure out of CPI, earnings growth for the year to July, or 2.5%.

State benefits are also decided by the September inflation figure, meaning payments will rise 1.7% in April, in the first increase in five years as the four-year benefit freeze comes to an end.

Mike Hardie, head of inflation at the ONS, said: “Inflation remained unchanged into September at its lowest rate since late 2016.

“Motor fuel and second-hand car prices fell, but were offset by price increases for furniture, household appliances and hotel rooms.”

Motorists saw lower fuel costs as petrol fell by 1p per litre against the previous month, while diesel fell by 0.8p.

Overall, motor fuel prices slipped 0.7%, putting a significant amount of downward pressure on inflation.

Another major downward pressure was a fall in second-hand car prices, which dropped 1.4% against the previous month.

The price of alcoholic drinks also slipped, falling 0.4% on the back of a 1.7% decline in the price of spirits.

These declines were offset by a significant increase in the price of household products.

Furniture prices increased by 2.1% for the month, carpet and flooring prices by 1.4%, and household appliances by 1.2%.

Increased prices at restaurants and hotels also helped to offset falling fuel prices, rising 0.8%.

This was particularly driven by a 2.6% increase in accommodation costs as hotel room prices continued to rise.

Another upward pressure was computer games, as a number of new releases ahead of the key Christmas period drove a 2.5% increase in the price of products in the games, toys and hobbies category.

Increases in the price of theatre and concert tickets also helped to keep inflation at the same level as the previous month.

The Retail Price Index (RPI) measure of inflation was 2.4% last month, dipping from 2.6% in August. RPI was last lower in November 2016.

The CPI including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 1.7% in September, unchanged from the previous month.