UK inflation eases for first time in five months to 3.6% before crunch budget
UK inflation fell to 3.6% in October, easing pressure on households and providing a boost for Rachel Reeves as the chancellor prepares for her make-or-break budget next week.The Office for National Statistics (ONS) said annual inflation as measured by the consumer prices index cooled for the first time in five months, declining from a peak of 3.8% over July, August and September.Grant Fitzner, the ONS chief economist, said: “Inflation eased in October, driven mainly by gas and electricity prices, which increased less than this time last year after changes in the Ofgem energy price cap.“The cost of hotels was also a downward driver, with prices falling this month. These were only partially offset by rising food prices, following the dip seen in September.”Last month’s decline matched City economists, but is still well above the government’s 2% target.Reeves has vowed to cut living costs in her highly anticipated tax and spending statement on 26 November, including measures to bring down the inflation rate to smooth the path for the Bank of England to cut interest rates.The chancellor said: “This fall in inflation is good news for households and businesses across the country, but I’m determined to do more to bring prices down.“That’s why at the budget next week I will take the fair choices to deliver on the public’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”Threadneedle Street opened the door earlier this month to a post-budget cut in borrowing costs in December after it signalled inflation had probably peaked amid mounting fears over the strength of the economy.Strengthening the case for a cut in rates from as early as next month, core inflation – which excludes food and energy and is closely watched by the Bank – cooled from 3.5% in September to 3.4%.skip past newsletter promotionSign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningPrivacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotionBorrowing costs have been cut five times since Labour came to power in July 2024, with the last reduction in August.However, the UK continues to face the highest inflation rate in the G7, with households under pressure from fast-rising food prices in particular. Mel Stride, the shadow chancellor, said: “Inflation has been above target every single month since Labour’s last budget, leaving working people worse off.”Highlighting the pressure on families, the annual inflation rate for food and non-alcoholic drinks rose from 4.5% in September to 4.9% in October, driven primarily by increases in the price of bread and cereals.The prices of meat, fish, and vegetables rose, alongside increases for sugar, jam, honey, syrup and chocolate, which were offset partially by a modest decline in the price of fruit.Economists said it was possible the headline inflation rate could rebound in November. However, rising unemployment and slowing wage growth is expected to encourage the Bank to cut interest rates, depending on the outcome from the chancellor’s budget.Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales, said: “Though the conditions for a December interest rate cut are falling into place, the budget is a last obstacle as rate-setters will want to gauge the effect of the policies announced before authorising another rate reduction.”
