Economists believe UK inflation has peaked at 3% and will begin to ease, as the impact of the pound's hit from the Brexit vote begins to dissipate.

Inflation remained at 3% in October according to the consumer price index (CPI) measure, unchanged from September and lower than the 3.1% reading that had been expected.

The retail price index, which includes the impact of mortgage costs, rose to 4% in October, up from 3.9% in September. 

The pound edged lower against the dollar to trade at $1.31, while robust eurozone economic data helped the euro rise 0.5% against sterling to trade at 89.4p.

The inflation reading means Bank of England governor Mark Carney won't need to write a letter to chancellor Philip Hammond. The governor is required to write to the chancellor when inflation is more than one percentage point above or below the target, currently 2%.

James Smith, economist at ING, said October's reading 'probably represents the peak for inflation'.

'Over coming months, we expect headline CPI to trend lower, reaching the 2.3% / 2.4% area by Easter time. As the currency effect starts to peter out, the question is whether domestically-generated price pressures start to take over.'

Ben Brettell, senior economist at Hargreaves Lansdown, agreed. 'We're already seeing slower rises in the costs of raw materials and prices at the factory gate, which could be a sign the inflationary spike is coming to an end,' he said. 'That said it looks like it will be a slow decline from here.'

That is likely to reduce pressure on the Bank of England for another interest rate rise, after last month's hike from 0.25% to 0.5%, the first in over a decade.

'Today's numbers will dampen expectations on whether we will see further rate hikes anytime soon,' said Chris Williamson, chief business economist at IHS Markit, though he argued tomorrow's wage growth data would be closely watched.

'The Bank of England's hawks have set their stall on expectations of higher wage pressures,' he said. 'An absence of stronger pay growth alongside today's unexpectedly steady inflation numbers will therefore not only dampen expectations that rates will rise again, but will lead to further debate over the wisdom of the Bank's recent rate hike.'