Inflation holds steady at 2% target: ONS

CPIH inflation, the ONS' headline measure which includes owner occupiers’ housing costs, also remained unchanged at 1.9%.

The largest downward contributions to the figure came from electricity, gas and motor fuels, offset by clothing and food.

Alessandro Capuano, global head of brokerage and business development at Fineco Bank, commented: “Today’s figures chime with the Monetary Policy Committee’s thinking, who are in favour of a gradual hike of interest rates. The announcement will be particularly positive and give some air to the free-falling Sterling.

“However, the MPC is basing its forecasts on the assumption of a smooth Brexit deal. The markets on the other hand, are more realistically assuming something a lot less ordered. The likelihood of a hike at some point soon is shrouded in scepticism, while the chances of a cut remain. The fate of the GBP is in the hands of the Conservative leadership election. While the result next week is likely to give some steer, which will help markets, many appear to have made up their minds already. Our own data shows that people have already started to move their money out of GBP to be held in other currencies, particularly in the last two weeks.”

Anthony Morrow, CEO and co-founder of digital financial advice firm OpenMoney, said: “Inflation continues to be the dog that hasn’t barked. At 2.0 percent, it remains very muted, despite the unprecedented fall in the value of sterling since the vote to leave the EU, which in normal times should have led to higher import prices.

“But we live in a world turned upside down. Even with the pound testing new lows this week as the prospect of a no-deal Brexit increases, nobody is seriously suggesting that policymakers raise interest rates to support the currency - as they would have done in the past. Instead, the next move in the cost of borrowing is likely to be down, further easing inflationary pressures."