The UK’s inflation rate slowed to 3.6% in the year to October, marking the slowest pace of price rises in four months, according to data from the Office for National Statistics (ONS). The easing comes as household energy costs and hotel rates increased less than last year, but food prices continued to climb after a brief dip in September.
Economists had expected inflation to fall slightly further, to 3.5%, following September’s 3.8%. The latest figures come just a week ahead of the government’s Budget, which is expected to combine tax rises and spending cuts to support public finances.
Chancellor Rachel Reeves said she was committed to reducing the pressure on household budgets. “I recognise that inflation and the cost of living is still a big burden on families across the country,” she said, adding that easing these pressures would be a central focus of the upcoming Budget.
The biggest upward pressure on prices in October came from food and non-alcoholic drinks, which rose 4.9% over the year, up from 4.5% in September. Bread, meat, fish, vegetables, chocolate, and confectionery all saw price increases, while fruit prices fell slightly.
Grant Fitzner, ONS chief economist, said the fall in overall inflation reflected smaller increases in gas and electricity costs following changes to the Ofgem energy price cap. Household energy prices rose 2% in the year to October, well below the 9.6% increase recorded at the same time last year. Hotel rates also contributed to lower inflation, with prices dipping more than in previous years as the industry moves from the summer peak towards the Christmas season.
Despite the slowdown, inflation remains above the Bank of England’s 2% target. The next interest rate decision on 18 December is likely to focus on the longer-term impact of borrowing costs and whether further monetary action is needed to control price growth.
Fuel costs, meanwhile, continued to rise, affecting both drivers and the cost of goods delivery. Prices for raw materials and factory gate costs also increased, adding pressure on businesses, Fitzner noted.
The Food and Drink Federation, representing the UK’s food manufacturers, said food price inflation reflected higher costs for ingredients and energy, as well as regulatory pressures, including packaging taxes and rising National Insurance contributions.
While slower inflation provides hope that price rises may have peaked, households continue to feel the impact of rising food and fuel costs, highlighting the ongoing challenge for policymakers ahead of the Budget.
