UK Inflation Drops to Four Month Low as Food Prices Edge Higher

The UK Inflation Drops to its lowest level in four months, offering a rare moment of relief for households still battling rising costs. New data from the Office for National Statistics shows inflation eased to 3.6 percent in the year to October, slipping from 3.8 percent in September.

The slowdown was driven largely by smaller increases in household energy bills and a sharper than usual drop in hotel prices. Economists had predicted inflation would fall slightly further to 3.5 percent.

The figures come just one week before the government unveils its closely watched Budget, which Chancellor Rachel Reeves says will focus heavily on easing the cost of living.

“I am determined to do more to bring prices down,” Reeves said. “Inflation and the cost of living remain a heavy burden on families across the country.”

Food Prices Climb Again

Despite the wider slowdown, food and non alcoholic drinks remain a key source of upward pressure. Annual food inflation rose to 4.9 percent in October, up from 4.5 percent the month before.

Prices increased across bread, meat, fish, vegetables, chocolate and confectionery. Fruit prices were the only category to fall slightly.

Energy Costs Stabilise

The regulator Ofgem increased its energy price cap by 2 percent in October, far below the 9.6 percent rise seen a year earlier. This softer increase played a major role in pulling headline inflation lower.

“Inflation eased in October, driven mainly by gas and electricity prices, which increased less than this time last year,” said ONS chief economist Grant Fitzner.

At the same time, hotel prices dropped more sharply than usual for the autumn season, contributing to the overall dip.

Higher Fuel Bills and Factory Costs

Drivers are still feeling the impact of higher fuel costs, which climbed again last month. Rising fuel prices also added to delivery and business costs.

Raw material costs for manufacturers continued to increase, while factory gate prices also rose.

The Food and Drink Federation said rising ingredient costs, energy prices and regulatory pressures, including packaging taxes and National Insurance increases, were keeping food inflation elevated.

Interest Rate Outlook

Although inflation remains above the Bank of England’s 2 percent target, the steady decline strengthens hopes that interest rates could fall. Analysts expect the Bank to pay close attention to longer term inflation risks when it delivers its next decision on 18 December.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said a December rate cut was now “nailed on” but warned the next reduction could take time.

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Political Reaction

Shadow chancellor Sir Mel Stride said inflation had remained above target every month since Labour’s previous Budget, leaving workers worse off.

Liberal Democrat deputy leader Daisy Cooper urged the chancellor to act quickly, calling for emergency support to lower energy bills and a temporary VAT cut for the hospitality sector.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said the drop in inflation would bring welcome relief. “If you are wondering what that warm breeze is, it is the entire country heaving a sigh of relief,” she said.