SCOTTISH Chambers of Commerce has highlighted how far below target annual UK inflation remains, after official figures showed an uptick in October.

Annual UK consumer prices index inflation ticked up to 1.3 per cent in October, from a five-year low of 1.2 per cent in September, according to figures published yesterday by the Office for National Statistics. However, economists highlighted their expectation that annual CPI inflation would soon fall again, amid weakness in oil prices.

The rise in annual inflation in October had been forecast by economists. It partly reflected the fact that petrol prices fell less sharply during October than at the same time last year. The Treasury has set the Bank of England the target of keeping annual CPI inflation at two per cent.

Liz Cameron, chief executive of Scottish Chambers, said: "Inflation continues to remain significantly below the UK Government's target, and the Bank of England is expecting this to continue for some months to come.

"The economic recovery in Scotland has been pretty solid this year but, as the Prime Minister has pointed out, there are headwinds on the horizon as a result of the relative weakness of several key international markets, not the least of which is the eurozone."

Contemplating the outlook for UK base rates, which have been at a record low of 0.5 per cent since March 2009, Ms Cameron added: "Whilst we expect that interest rates are likely to begin a process of normalisation in the latter part of 2015, it is clear that inflation is, for now, under control.

"As businesses approach the next year, however, they should expect that the cost of finance may begin to increase in the medium term."

Howard Archer, chief UK economist at IHS Global Insight,said there remained a strong possibility annual UK CPI inflation could dip briefly below one per cent.

On the old all-items retail prices index measure, annual UK inflation was at 2.3 per cent in October, unchanged from September's rate.