Skip to content
Search

Latest Stories

UK inflation hits three-year low, rate cuts likely

The Consumer Prices Index (CPI) reached 1.7 per cent last month

UK inflation hits three-year low, rate cuts likely
FILE PHOTO: People walk outside the Bank of England in the City of London financial district in London, Britain May 11, 2023. REUTERS/Henry Nicholls.

BRITAIN's annual inflation rate fell to a three-year low in September, official data showed Wednesday (16), fuelling speculation that the Bank of England will resume cutting interest rates next month.

The Consumer Prices Index (CPI) reached 1.7 per cent last month, well below the BoE's two-per cent target, after hitting 2.2 per cent in August, the Office for National Statistics (ONS) said in a statement.


The inflation rate was lower than the 1.9 per cent rise that analysts forecast and has cemented expectations that the central bank would likely cut interest rates again in November.

"Lower airfares and petrol prices were the biggest driver of this month's fall," said Grant Fitzner, chief economist at the ONS.

He added that this was partially offset by a strengthening in food price inflation for the first time since early last year.

The inflation data "clears the path for another 25-basis point rate cut in November", said Richard Flax, chief investment officer at wealth management company Moneyfarm.

"The underlying conditions support this move -– energy prices have eased, the economy has cooled, and the labour market has stabilised," he said.

Chancellor Rachel Reeves (C) chairs a meeting of the National Wealth Fund Taskforce at 11 Downing Street on July 9, 2024 in London, England. (Photo by Justin Tallis - WPA Pool/Getty Images)

It comes after official data on Tuesday (15) showed an easing in Britain's unemployment rate and wage growth, which also bolstered analysts expectations of a rate cut.

"It is absolutely amazing to see such a dramatic drop in the UK's CPI number, and the news had brought nothing (but) good things for the Bank of England," said Naeem Aslam, chief investment officer at Zaye Capital Markets.

The inflation news will likely be a boost to the new Labour government ahead of its maiden budget later this month.

Prime minister Keir Starmer has warned Britons that the budget announcement will be "painful", with tax rises and spending cuts expected.

"We are being repeatedly told tough decisions are to be announced, so any sliver of good economic news will likely be pounced upon," said Lindsay James, investment analyst at Quilter Investors.

Starmer's Labour government won power at the start of July, ending 14 years of Tory rule.

In August, the BoE reduced it key rate for the first time since early 2020, from a 16-year high of 5.25 per cent as inflation returned to normal levels.

But it decided against a second reduction in a row in September.

The BoE hiked borrowing costs 14 times between late 2021 -- when they stood at a record-low 0.1 per cent -- and the second half of last year.

Supply-chain disruptions following Covid lockdowns, together with soaring food and energy prices caused by Russia's invasion of Ukraine, sent global inflation surging.

Britain's finance ministry welcomed the fall in inflation, which offers a helpful backdrop for chancellor Rachel Reeves as she readies her first budget, due on Oct. 30.

A less inflationary outlook would slightly improve the economic and fiscal outlook for the budget as Reeves struggles to find the extra money to invest in public services and new infrastructure without spooking investors.

Her spending plans will be watched closely by the BoE.

"Though the stars are aligning  for a November rate cut, the upcoming Budget is the final hurdle as rate setters will want to assess the inflationary impact of any measures announced before loosening policy again," Suren Thiru, economics director at ICAEW, an accountancy body, said.

(Agencies)

More For You

 Listeria

Health officials have launched an investigation to determine the full extent of the contamination

Getty Images

3 dead, 5 seriously ill due to listeria after eating chocolate dessert

Three people have died and five others have fallen seriously ill following a listeria outbreak linked to a chocolate dessert supplied to NHS hospitals across the UK. Health officials have launched an investigation to determine the full extent of the contamination, which has prompted a nationwide recall of chilled desserts from hospitals and care homes.

The Food Standards Agency (FSA) has identified mousses and ice creams made by Cool Delight Desserts as the suspected source of the listeria outbreak. This recall covers all chilled desserts including mousses, ice creams, ice cream rolls, and yoghurts supplied by the company to NHS facilities. The action is being taken as a precaution while health authorities continue their investigation.

Keep ReadingShow less
maid

The service offers domestic help at customers' doorsteps within 15 minutes, charging 59 rupees (50 pence) per hour.

istock

India's Urban Company launches maid service in India for 50p an hour

URBAN COMPANY, a Mumbai-based firm known for providing services such as plumbing, electrical work, and beauty treatments, has introduced a new feature called "Insta Maids."

The service offers domestic help at customers' doorsteps within 15 minutes, charging 59 rupees (50 pence) per hour.

Keep ReadingShow less
Horizon scandal: Victim sues Post Office and Fujitsu

Hundreds of sub-postmasters were wrongfully convicted after faulty software said money was missing from their branch accounts. (Photo: Getty Images)

Horizon scandal: Victim sues Post Office and Fujitsu

FORMER sub-postmaster Lee Castleton has launched legal action against the Post Office and Fujitsu, becoming the first individual Horizon IT scandal victim to sue the two organisations.

According to recent reports, Castleton has instructed his solicitors, Simons Muirhead Burton, to issue proceedings at the High Court against the Post Office and Fujitsu on his behalf. Castleton is seeking compensation, alleging the civil judgement against him was obtained by fraud.

Keep ReadingShow less
Tulsi Gabbard

Gabbard, who arrived in India this week on a diplomatic visit, made the comments in an interview with Indian broadcaster NDTV on Monday.

Getty Images

Bangladesh rebukes Tulsi Gabbard for comments on attacks on minorities

BANGLADESH has criticised US intelligence chief Tulsi Gabbard over her remarks on religious violence in the country, calling them unfounded and potentially harmful to sectarian relations.

Gabbard, who arrived in India this week on a diplomatic visit, made the comments in an interview with Indian broadcaster NDTV on Monday. When asked about violence in Bangladesh, she referred to the "long-time unfortunate persecution, killing, and abuse of religious minorities" and said these were areas of concern for the US government.

Keep ReadingShow less
Indian student regrets moving to Canada

The student has sparked widespread conversation on social media after sharing a Reddit post

iStock

Indian student regrets moving to Canada, lists reasons in Reddit post

An Indian student currently studying in Canada has sparked widespread conversation on social media after sharing a Reddit post detailing their struggles and regrets about moving abroad. The post, which went viral on the r/delhi subreddit, offered a candid look at the realities many international students face when moving to countries like Canada in search of better opportunities. Titled “I regret moving to Canada,” the post highlights three major issues international students often grapple with: exploitation by colleges, financial struggles, and mental health challenges.

The student begins by addressing the common perception in India that moving abroad, particularly to countries like Canada, offers better opportunities and a path to a more successful future. “Every day, I see people in India dreaming of moving abroad, believing there are better opportunities. But let me give you a reality check. I live in Canada, and it is not what it seems,” they wrote. They then proceeded to explain how international students are often seen as a business by both colleges and the government, with many realising too late that they have been misled about the prospects awaiting them in Canada.

Keep ReadingShow less