UK Inflation Drops Beyond Anticipated Levels in October to 4.6%, Marking a Two-Year Low

 

LONDON — In October, UK inflation saw a significant decline, dropping to 4.6% from the previous month’s 6.7%, marking a two-year low.

The headline consumer price index remained unchanged on a monthly basis. According to a Reuters poll of economists, the anticipated year-on-year increase for the headline CPI was 4.8%, with a monthly rise of 0.1%.

Core CPI, excluding volatile components such as food, energy, alcohol, and tobacco prices, recorded an annual figure of 5.7% in October, down from 6.1% in September.

The Office for National Statistics disclosed that the most substantial reduction stemmed from housing and household services, with the annual rate for CPI hitting the lowest point since records commenced in January 1950.

Contributing to the easing of inflation, food and non-alcoholic beverages also saw a decline, with the annual rate reaching its lowest level since June 2022.

Inflation in the UK drops to its lowest point in a span of two years

Earlier this month, the Bank of England opted to maintain its benchmark interest rate at 5.25%, marking a pause after a series of 14 consecutive hikes concluded in September. This decision was made in an effort by policymakers to bring inflation back down to the Bank’s target of 2%.

The news of the rate stability was welcomed by Downing Street, especially in light of Prime Minister Rishi Sunak’s commitment in January to halve U.K. inflation. At that time, the annual Consumer Price Index (CPI) rate stood above 10%.

Suren Thiru, the Economics Director at ICAEW, interpreted the significant drop as a signal that the U.K. has “turned the corner” in its fight against inflation, particularly given the decline in core CPI. However, he noted that the reduction in inflation by half since the beginning of the year was not primarily attributed to government actions.

In January I made halving inflation this year my top priority.

I did that because it is, without a doubt, the best way to ease the cost of living and give families financial security.

Today, we have delivered on that pledge. pic.twitter.com/qcfuLeLiXe

— Rishi Sunak (@RishiSunak) November 15, 2023

“While the Prime Minister has successfully met his target to cut inflation by half this year, this achievement is attributed more to the downward pressure on prices resulting from falling energy costs and rising interest rates than any direct government intervention,” he stated.

“Although subsequent declines in inflation are expected to be more gradual, the dampening effect on demand from a weakening job market and elevated interest rates might lead to a quicker return of inflation to the Bank of England’s 2% target than their current projections anticipate.”

The Wednesday print edition is poised to reinforce market expectations that the central bank will maintain interest rates during its December meeting.

However, Lindsay James, investment strategist at Quilter Investors, cautioned that the Monetary Policy Committee would prefer to observe “more evidence of a slowdown in inflation across the economy, rather than it primarily stemming from fluctuations in international energy markets.”

“With Core CPI (excluding energy, food, alcohol, and tobacco) experiencing a more gradual decline, currently at 5.7% and down from 6.1% in September, it is evident that further progress towards the 2% target is likely to be relatively slow,” she added.

TRENDING NOW
In 2008, Trautman purchased the Delos sailboat and embarked on a global journey two years later.
A 47-year-old pays $1,900 per month to reside on a $398,000 sailboat, travelling the world: Explore the interior

HANGZHOU, CHINA – NOVEMBER 15, 2023 – An aerial photograph reveals a new property under construction in Hangzhou City, Zhejiang Province, China, on Nov 15, 2023. On the same day, data from the National Bureau of Statistics indicated that from January to October 2023, national real estate development investment amounted to 9,592.2 billion yuan, reflecting a 9.3% year-on-year decrease. Of this total, investment in residential housing stood at 7,279.9 billion yuan, marking an 8.8 percent decline. (Photo credit should read CFOTO/Future Publishing via Getty Images)

China’s incomplete property projects are 20 times the size of Country Garden
Commercial and residential properties grace the city skyline in Zurich, Switzerland, on Wednesday, Nov. 11, 2015.

The world’s best and brightest are flocking to these countries
A still life of Wegovy, an injectable prescription weight loss medicine that has assisted individuals with obesity. It should be used alongside a weight loss plan and physical activity.
Jim Cramer predicts that insurance companies will cover the cost of ‘revolutionary’ weight-loss drugs for their members.