Why inflation has dropped to 4.6 per cent and what it means for interest rates
15.11.2023 - 13:25
/ manchestereveningnews.co.uk
UK inflation has slowed to the lowest rate in two years, according to the latest figures. Consumer Prices Index (CPI) inflation was 4.6 per cent in October, down from 6.7 per cent in September, the Office for National Statistics (ONS) confirmed on Wednesday.
Prime minister Rishi Sunak has declared that the latest drop means he has met his target of halving inflation - from 10.7 per cent to below 5.4 per cent - by the end of the year. However, the rate remains well above the Bank of England’s 2 per cent target, which it doesn't expect the government to meet until the end of 2025.
Economists have said that the lower energy price cap helped drive the sharp drop in inflation last month. Soaring energy costs saw rates capped at £2,500 for the typical household last year, while this year bills have been capped at £1,834 by regulator Ofgem thanks to lower wholesale prices.
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Read more cost of living stories from the Manchester Evening News here.
This, together with falling food price inflation, helped drive the rate of inflation down, with the Bank of England’s near two-year interest rate rise campaign also meaning firms are not pushing through the hefty price increases we saw a year ago.
The average price of gas was down year-on-year by 31 per cent last month, compared with a year-on-year rise of 1.7 per cent in September, while electricity was down 15.6 per cent compared with a rise of 6.7 per cent in September.
Rice, pasta and soft drinks were among the grocery items seeing the biggest fall in inflation. Yoghurt, rice, pizza and quiche, frozen seafood and crisps all saw inflation at least three percentage