By Daniel Hunter

The Office for National Statistics (ONS) have released data that shows UK inflation, as measured by the Consumer Prices Index (CPI), was down to 2.2% in October.

The ONS says that the main contributions to the slowing rate of inflation, down 0.5% from last month, came from transport and education.

That doesn't mean those prices are falling - it means they are rising at a slower rate than they were this time last year. So this time last year, maximum £9,000 university tuition fees were being introduced for the first time.

Jeremy Cook, chief economist at foreign exchange providers, World First, said: “Inflation seems to be slipping back towards the Bank of England’s target at last, following years of it remaining “stickily” towards the 3.0% level. Despite recent chatter over utility rises, falls in energy prices across world markets have seen a nice decline in monthly price increases.

“The ECB chairman, Mario Draghi, pinned the slip on the oil markets. Crude has slipped dramatically in recent months as global growth has slowed and geopolitical tensions have subsided in the Middle East.

“The fall in the core rate of inflation — without the volatile energy and food components — shows that the lack of wage push inflation is finally having an effect on prices - without rising pay packets, prices will have to come lower.

“Sterling has been hit hard by the number as the market looks at three potential outcomes. Firstly, interest rates are likely to remain lower for longer if inflation poses even less of a concern to forward guidance. Secondly, more QE could be used if the Bank believes that inflation has fallen too much. And, finally, how will a lower pound affect trade flows — as exports become cheaper.”

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