UK inflation rose by more than expected to a three-month high in October, underpinned by rising prices of clothing and second-hand cars, according to official figures published by the Office for National Statistics (ONS) on Wednesday.

The consumer price index, or CPI, increased by 0.7 per cent in October compared to 0.5 per cent a month earlier as clothing prices increased, returning to a more normal seasonal pattern after the COVID-19 disruptions this year. Economists had forecast an inflation rate of 0.6 per cent for October.

After deep discounting during the first lockdown, as the rapid spread of COVID-19 forced consumers to shun retail outlets, the ONS said that prices rose in October at a similar rate to last year, despite increasing pressure after the second wave of the pandemic forced local lockdowns.

Meanwhile, in the US, a report released by the Federal Reserve (Fed) on Thursday showed a significant rebound in industrial production during October. The Fed said industrial production – a measure of output at factories, mines and utilities – jumped by 1.1 per cent in October after falling by a revised 0.4 per cent in September. However, output remains 5.6 per cent below where it was in February, before the coronavirus pandemic hit, the Fed said.

Economists said they expect to see production continue to make up lost ground in the coming months since demand for goods has held up better than demand for services. But the alarming rise in new coronavirus cases around the country could slow that expansion.

Finally, Japan’s exports extended declines in October but at the slowest rate in almost two years, as increases in Chinese and US demand for cars and other items drove exports, helping the world’s third-largest economy emerge from its worst post war slump.

Ministry of Finance data out on Wednesday showed that exports fell 0.2 per cent in October from a year earlier, compared with economists’ estimates of a 4.5 per cent decline. It was the smallest decline in Japan’s 23 straight months of export contraction and comes on the heels of 4.9 per cent drop in the previous month.

The trade data is likely to encourage policymakers who are counting on external demand to shift Japan’s recovery away from government stimulus back to private sector activity, although a coronavirus resurgence has clouded the outlook.

This report was compiled by Bank of Valletta for general information purposes only.