UK inflation fell to 1.7% in the year to September.
It marks the first time inflation has fallen below the 2% target for three years. The 1.7% figure for September is the lowest since April 2021 when it came in at 1.5%.
It’s also a drop from 2.2% in the year to August, potentially paving the way for interest rates to be cut further next month.
Core inflation, which strips out volatile elements such as food and energy, fell from 3.6% to 3.2%, the Office for National Statistics (ONS) said.
Chief secretary to the Treasury Darren Jones said the drop in the pace of price rises “will be welcome news for millions of families”.
“However, there is still more to do to protect working people, which is why we are focused on bringing back growth and restoring economic stability to deliver on the promise of change”, he added.
The fall in inflation will be welcome news for the chancellor, Rachel Reeves, as she prepares to unveil the autumn budget on 30th October.
Commenting on the new figures, ONS chief economist Grant Fitzner said: “Lower airfares and petrol prices were the biggest driver for this month’s fall.”
Martin Sartorius, principal economist at the CBI, said: “Inflation dropping noticeably below the Bank of England’s target in September will come as good news to households. While headline inflation is still set to tick up in the latter part of this year, these latest data will reassure members of the Monetary Policy Committee that price pressures are easing.
“Below-target inflation in September makes it increasingly likely that the MPC will choose to cut rates in November. However, some members of the MPC will remain wary of the upside risk that sticky services inflation poses to the outlook. Therefore, we still expect to see a gradual path for interest rate cuts in the near term.”
Anna Leach, chief economist at the Institute of Directors, said: “Today’s decline in inflation follows hot on the heels of yesterday’s softer labour market data, and helps smooth the path to the next rate cut.”
She added: “But, there is still inflationary pressure out there. Inflation is set to rise next month as the 10% rise in the Ofgem price cap comes into effect, oil prices are volatile, public sector pay settlements will contribute to stickiness in wage growth and the Bank will need to assess the inflationary impact of the Budget. How these different factors play out will ultimately define the pace of interest rate cuts.”
Josh Self is Editor of Politics.co.uk, follow him on X/Twitter here.
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