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The Office of National Statistics’ (ONS) headline measure of inflation, the Consumer Price Index (CPI), has fallen to 4.6% in October, less the half the rate of price growth seen at the start of 2023.
The latest CPI data shows inflation having fallen 2.1 percentage points form 6.7% in September. The ONS cited this month’s slightly reduced energy price cap as among the main factors contributing to the fall in inflation: October 2022 saw inflation reach its peak at 11.1% and coincided with the energy price cap rising to its highest level, although the impact of this was offset by government support for billpayers over the last winter.
Slowdowns in food and drink price inflation also contributed strongly to the latest fall in the CPI, with this category recording its slowest rate of price rises since June 2022, the ONS has reported.
The latest fall in inflation comes after the Bank of England’s Monetary Policy Committee voted in favour of holding interest rates at 5.25% and forecast inflation would fall sharply to around 4-5% by the end of 2023. Despite the fall, the MPC commented that it expected interest rates to remain at around their current level, so this latest fall in inflation is unlikely to offer a respite to the economic pressures of higher interest rates. Recent GDP data from the ONS has also been in line with the Bank of England’s figures, with no overall growth in the last quarter.
With inflation now less than half its rate at the start of 2023, the latest falls will also ease pressure on the government ahead of the Chancellor’s Autumn Statement on 22nd November, with Prime Minister Rishi Sunak pledging in January to reduce inflation to half the levels seen at the time.