The rise in CPI inflation from 3.1% in August to 3.5% in September (consensus 3.4%, CE forecast 3.6%) mostly reflected higher fuel prices. There were also tentative signs that higher energy prices are starting to feed through to non-energy inflation. Taken together with a likely 13% rise in utility prices in January, we expect these “first-round” indirect inflation effects to lift CPI inflation to a peak of about 4.0% early next year.
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