A decrease in inflation in the UK for the first time in years

Nov 15, 2023 | Blog

Home $ Blog $ A decrease in inflation in the UK for the first time in years

UK inflation dropped more than expected in October, hitting 4.6% due to lower energy prices. This decline allowed Prime Minister Rishi Sunak to claim success in halving the inflation rate by year-end.

The Consumer Prices Index increase was below economists’ 4.8% prediction and September’s 6.7%. Sterling dipped 0.3% against the dollar to $1.246, reflecting market confidence in the Bank of England’s concluded interest rate hikes.

The fall in headline inflation was driven by Ofgem’s price cap reduction and a slowdown in food prices. Core CPI, excluding energy and food, decreased from 6.1% to 5.7%.

Despite the decrease, inflation remains over twice the central bank’s 2% target, with prices 16% higher than October 2021.

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The data sparks discussions on potential interest rate reductions, with market predictions pointing to the first rate cut in June next year and additional cuts in 2024.

This global trend aligns with easing inflation in the US and eurozone. While the UK’s inflation decline brings relief, Shadow Chancellor Rachel Reeves emphasizes the ongoing financial challenges for working people, including higher mortgage bills and persistent price increases.

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