Inflation is down – but will it stay there?

In September, for only the third time in 18 months, Britain's inflation was lower than expected. But what is the future: inflation, deflation or stagflation?

For only the third time in 18 months, inflation was lower than expected. In September the annual rate of consumer price inflation (CPI) fell from 1.6% in August to 1.1%, a five-year low. The retail price index, which includes mortgage rates, edged down further to 1.4%. A slide in gas and electricity prices (which were hiked last September) and a decline in food prices were chiefly responsible for the drop in CPI. The news dealt sterling another blow.

What the commentators said

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