The Office for National Statistics (ONS) attributed lower fuel costs and the price of used cars as the main drivers behind the 1.7% rate for the Consumer Price Index last month - the same rate as in August and the lowest since November 2016.

UK Retail Price Index

Figures showed that the Retail Price Index stood at 2.4% in September, down from 2.6% in August. The ONS's preferred measure of inflation, which includes owner-occupiers' housing costs, remained at 1.7%.Mike Hardie, head of inflation at the ONS, said, "Motor fuel and second-hand car prices fell, but were offset by price increases for furniture, household appliances and hotel rooms."Sam Cooper, vice-president of market risk solutions at Silicon Valley Bank, commented, "While the below target reading will provide a welcome distraction for participants searching for some Brexit respite, direction will continue to be driven by political developments."After unemployment data disappointed yesterday, today’s inflation miss could bolster the case for a dovish mantra from the BoE as they navigate uncertain waters. "Participants with sterling exposure will likely spend the days chained to their desk as headlines continue to fuel volatility.”Separate ONS data showed that, year-on-year, house price growth in August was 1.3%, up from July's seven-year of 0.8%. It meant the average property price across the country was £235,000.In London, there was an annual price drop of 1.4%, which kept the increase across England as a whole down to only 1.1%. Wales, meanwhile, saw a 4.5% increase, Northern Ireland a 3.5% rise and Scotland a 1.6% increase.

EY Item Club: likely house prices will remain soft in the near term

Howard Archer, chief economic adviser at the EY Item Club, said, "Despite the August pick-up in house prices reported by the Land Registry, we strongly suspect that house prices will remain soft in the near term with the economy largely struggling and the outlook highly uncertain. Indeed, both the Nationwide and Halifax reported softer house prices in September. Consequently, we expect house prices to only rise around 1% over 2019."Should the UK leave the EU with a deal on October 31 - or early next year - we believe reduced uncertainty could see house prices rise by around 2% in 2020. Housing market activity – and possibly to a lesser extent prices – could be given a lift in 2020 if the government cuts Stamp Duty significantly in the Budget later this year."However, the economy still looks set for a challenging 2020 even if there is a Brexit deal so that the upside for house prices is likely to be limited."

For more news and views, visit our dedicated UK section.

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