Why inflation has dropped to 4.6 per cent and what it means for interest rates
manchestereveningnews.co.ukUK 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. READ MORE: Halifax and HSBC announce new mortgage rate cuts as property expert says 'peak rates are behind us' 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.
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