Consumer price inflation at a 7-month high of 3.58% in October

The GST Council’s decision to cut tax rates on 177 items from 28% to 18% is expected to partially ease inflation going ahead

Britain's annual inflation rate steadied at a five-year high of 3.0 percent in October as rising food prices offset falling motor fuel costs, official data showed Tuesday.

However, on a year-on-year (YoY) basis, the CPI inflation last month was lower than 4.20 per cent recorded in October 2016.

A study of government data suggests that the retail inflation would have been much higher if the price of pulses had not fallen by 23 per cent on account of bumper crop this year.

The prices of food products, which have the highest weightage in the product basket that determines the inflation number, grew 2.26 per cent.

Meanwhile following the latest inflation data, "there was a very slight initial drop in the value of sterling as markets anticipate that inflation may not peak beyond 3.0 percent and future interest rate rises may not therefore need to be imminent", Richard Stone, chief executive at stockbrokers The Share Centre, said in a note to clients.

The price rise in services appear to have been impacted by the implementation of GST as most services are taxed at 18 per cent compared to 14.5 per cent under the previous service tax regime. After all, the central bank's quarterly economic forecasts, upon which the rate hike was based upon, pointed to a further increase in inflation to 3.2 percent in October.

Prices of protein-rich items like eggs and milk (and its products) also increased.

"Firming up of crude prices has led to increase in fuel inflation to 6.36 per cent in October 17 from 5.56 per cent in September 17".

Decision to lower GST (goods and services tax) rates on over 200 items could help pull down retail inflation by 20 basis points from the current levels driven by lower food and beverage prices, says a report.

"However, this is due to adverse weather conditions and the situation should ease out in the coming months", he said.

People bore the brunt of higher vegetable prices.

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