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UK deflation persisted during October

A customer walks with her purchases outside Primark's flagship store on Oxford Street in London.
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A customer walks with her purchases outside Primark's flagship store on Oxford Street in London.

The prices of goods and services bought by U.K. households fell 0.1 percent in October from a year ago, in line with analysts' forecasts.

The consumer price index (CPI) fell 0.1 percent in October from the same period last year, according to figures from the Office of National Statistics (ONS).

This is the same rate of inflation as seen in the year to September due to a smaller than usual rise in clothing prices and a fall in motor fuel prices.

The latest figure continues the trend of negligible inflation that the U.K. has experienced since the start of 2015 according to the ONS.

The latest data will be food for thought for the Bank of England when it comes to considering when it should raise interest rates. The bank's inflation target is 2 percent and a period of deflation, despite the bank's accommodative monetary policy, gives it little reason to rush to increase rates.

Sterling recovered off session lows after the data to trade at 1.5188 against the dollar.

Falling prices are good news for shoppers, one analyst noted, and should boost the U.K. economy further.

"Falling prices of essentials, including food and energy, are delivering a windfall bonus to U.K. consumers, bolstering spending power and enabling consumers to spend more on cars and 'big ticket' items," Ian Stewart, chief economist at Deloitte, said in a note Tuesday.

"This reduction in prices, combined with rising real incomes and ultra-low interest rates, should help the U.K. recovery plow on despite the headwinds from emerging markets."