UK Inflation Drops to Two-Year Low of 4.6% in October
UK inflation has seen a significant decrease, falling to a two-year low of 4.6% in October from 6.7% the previous month, according to the Office for National Statistics (ONS). This comes as welcome news for Downing Street, as Prime Minister Rishi Sunak had committed earlier this year to halving inflation in the UK.
The headline consumer price index (CPI) remained flat on a monthly basis, contrary to economists’ expectations of a rise of 0.1%. Reuters’ poll of economists had also predicted a year-on-year increase of 4.8% in the headline CPI, but it fell short at 4.6%.
In an attempt to combat rising inflation, the Bank of England decided to keep its benchmark interest rate unchanged at 5.25% earlier this month. This decision came after 14 consecutive rate hikes, with policymakers aiming to bring inflation back down to the Bank’s target of 2%.
The decrease in inflation is likely to be seen as a positive sign for the UK economy, as it suggests that the recent surge in prices may be starting to stabilize. However, economists warn that it is still too early to determine whether this decline is the start of a long-term trend or simply a temporary blip.
Robert Alster, CIO at wealth management firm Close Brothers Asset Management, commented on the latest figures, saying, “This is a positive step towards reducing inflationary pressures, but it’s important to remember that this is just one month’s reading. We need to see further evidence that inflationary pressures are truly easing before we can be confident of a sustained decline.”
The decrease in inflation comes as a relief for consumers who have been grappling with rising prices across various sectors, including food, energy, and transportation. The drop in inflation could potentially provide some respite for households that have been facing increased costs in recent months.
However, experts caution that there are still significant challenges ahead. Rising global energy prices, disruptions in supply chains, and ongoing labor market issues could all impact inflation levels in the coming months.
The government has been under pressure to address the rising cost of living, with calls for measures to tackle inflation and support households. The Prime Minister’s commitment to halving inflation earlier this year indicates the significance of this issue for the government.
As the UK heads into the festive season, the decrease in inflation may offer some relief to consumers, particularly as they navigate increased spending during the holiday period. However, it remains to be seen whether this decline in inflation will be sustained and have a lasting impact on the overall economy.
More detail via CNBC here… ( Image via CNBC )