UK Inflation Rate Slows to 1.7%, Below Bank of England Target

Strategic Insights -

A significant decrease in UK inflation rate has brought welcome news for millions of families. According to the latest economic update, the inflation rate has slowed to 1.7% in September, the lowest since October 2022, and has slipped below the Bank of England's target of 2% for the first time in nearly three years. This slowdown in price increases could potentially lead to an interest rate cut in November, with some speculating a reduction of 0.25 percentage points may be possible. The decrease in inflation has also had a positive impact on public pockets, with the increase in several benefits such as Universal Credit, major disability allowances, and carer's allowance slated for adjustment next April.

Key Takeaways:

  • The UK inflation rate has slowed to 1.7% in September, slipping below the Bank of England's target of 2% for the first time in nearly three years.
  • Prices are not rising as fast as they once were, but it doesn't mean things are getting cheaper.
  • The inflation rate has dropped from 11% in October 2022 to 1.7% currently.
  • The decrease in inflation has a positive impact on motorists, with motor fuels and lubricants prices sinking by 10.4% in September compared with the same month last year.
  • Airfares also played a role in tempering inflation rates, attributed to decreased costs following typical post-summer sales.
  • Food and non-alcoholic drink inflation cast a shadow with noticeable hikes in the price of essentials such as milk, cheese, eggs, and fruit hitting household finances.
  • The Treasury's Chief Secretary, Darren Jones, has welcomed the slowdown in price increases as "welcome news for millions of families".
  • Core inflation, which excludes energy, food, alcohol, and tobacco, has decreased, although it remains higher than the headline CPI index.
  • Goods prices fell at a faster pace, dropping to -1.4% last month from -0.9% in August.
  • Services inflation, which increased over the summer, also slowed from 5.6% to 4.9%.

Statistics:

  • UK inflation rate: 1.7% in September (down from 11% in October 2022)
  • Motor fuels and lubricants prices: sank by 10.4% in September compared with the same month last year
  • Core CPI rate: 3.2% in the year to September, down from 3.6% in August
  • Goods prices: fell at a faster pace, dropping to -1.4% last month from -0.9% in August
  • Services inflation: slowed from 5.6% to 4.9%

Sources:

  • Express: "UK inflation rate drops to 1.7% in September, below Bank of England target" (no date)
  • Good Morning Britain: "UK inflation rate slows to 1.7%, below Bank of England target" (no date)
  • Office for National Statistics: "Inflation rate slows to 1.7% in September" (no date)
  • NerdWallet UK: quoted in Good Morning Britain (no date)
  • Good Morning Britain: aired on weekdays at 6am on ITV1 and ITVX (no date)