The United Kingdom's inflation rate moderated in October, easing to 3.6% for the first time in five months. Grant Fitzner, the ONS chief economist, attributed this primary reduction to changes in Ofgem's energy price cap, resulting in a smaller increase in gas and electricity costs compared to the previous year. A decrease in hotel prices also contributed to the overall moderation.
Core inflation, which excludes volatile food and energy components and is closely monitored by the Bank of England, also cooled from 3.5% in September to 3.4% in October, a development noted as potentially supporting future interest rate adjustments.
Conversely, the annual inflation rate for food and non-alcoholic beverages saw an increase, rising from 4.5% in September to 4.9% in October. This rise was primarily driven by increases in the price of bread and cereals, highlighting ongoing cost pressures for households.
Economists have indicated a possibility that the headline inflation rate could rebound in November. However, rising unemployment and slowing wage growth are anticipated to encourage the Bank of England to consider cutting interest rates, pending the outcome of the Chancellor's upcoming budget statement.
In a political context, Reeves has stated plans to address living costs in a forthcoming tax and spending statement on November 26, with objectives including lowering the inflation rate to facilitate potential interest rate cuts. Mel Stride, the shadow chancellor, remarked that inflation has remained above target every month since Labour's last budget, asserting that this situation has negatively impacted working individuals.
Source: https://www.theguardian.com/business/2025/nov/19/uk-inflation-falls-budget-october-rachel-reeves-interest-rate