Inflation relief for UK consumers but auto parts suppliers warn of hard Brexit setback

British inflation cooled more than expected in September to a three-month low, offering some relief for consumers who have been squeezed financially since the Brexit vote.

UNITED KINGDOM (REUTERS) -Relief arrived for the British consumer, squeezed financially since the Brexit vote, as inflation fell more than expected in September to a three-month low.

Consumer prices rose at an annual rate of 2.4 per cent, reversing August's jump to a six-month high of 2.7 per cent. It takes some pressure off the Bank of England to raise interest rates.

And comes after a summer where wages rose at their fastest pace in almost a decade, even though growth of 3.1 per cent is small by historic standards.

"I think that what we are going to see is this nice sort of real wages improvement which has been talked about in recent days and that is going to be a positive for the UK economy, certainly benefiting the consumer in the pocket and helping retail sales so it's a generally positive bit of data that you don't often get for the UK," said Mr Richard Perry, Market Analyst Hantec Markets. 

But that could all change if Britain and the EU fails to reach a deal over Brexit. Prime Minister Theresa May is hoping to convince EU leaders at a Brussels summit. Before she left she vowed to stick to her current - much criticised - plan.

British Prime Minister Theresa May said: "Frictionless trade across our borders is exactly what lies at the heart of the free trade deal that is proposed in the government's plan put forward after the Chequers meeting in July, that's what we are working to deliver for people in this country."

The pressure is on May to get a deal, particularly from auto parts suppliers.

Industry lobbyists warned a no-deal Brexit could be catastrophic for the industry, which relies on frictionless trade between Britain and the EU.