UK Inflation Falls to 1.7%: Implications for Interest Rates and Benefits
UK inflation unexpectedly dropped to 1.7% in the year leading up to September, marking the lowest rate in three and a half years. This decline brings the annual inflation rate below the Bank of England’s 2% target, raising the possibility of further interest rate cuts in the coming months.
Official figures released on Wednesday attributed the surprising slowdown in inflation primarily to lower airfares and reduced petrol prices. This development is significant, as the inflation figure for September is typically used to determine benefit increases set to take effect in April of the following year.
Currently, UK interest rates stand at 5%. The Bank of England had initiated its first rate cut in August but opted to maintain rates in September. However, market analysts widely expect a cut in November, and the latest inflation data could also pave the way for another reduction in December. Susannah Streeter from investment firm Hargreaves Lansdown stated that the recent inflation figures “open the door for a December cut too.”
Danni Hewson, head of financial analysis at AJ Bell, asserted that a 0.25 percentage point cut in November is “pretty much nailed on,” with rising expectations for a subsequent cut in December. Yet, KPMG UK’s chief economist, Yael Selfin, cautioned that while a rate reduction is likely next month, inflation could rebound due to an expected 10% increase in household energy bills.
The Bank’s base interest rate significantly influences borrowing costs for consumers, affecting loans, mortgages, and credit cards. The current high rates have resulted in increased borrowing costs for individuals, while savers have benefitted from higher returns. Additionally, increased mortgage repayments for landlords have contributed to higher rents.
Despite the decline in inflation, it is essential to note that this does not equate to falling prices for goods and services; rather, it indicates a slower rate of increase. For many families, like Maria, a helper at a community food pantry in Liverpool, the cost of living remains a pressing concern. Maria, who relies on the pantry to supplement her family’s groceries, stated, “I’ve got to prioritise food and heating.” She remarked on rising prices at supermarkets, expressing frustration at the challenge of making ends meet.
The unexpected drop in inflation from 2.2% in August to 1.7% in September was largely driven by decreased airfares and fuel costs. Petrol and diesel prices fell by 10.4% compared to the same month last year, while airfare prices also experienced a more significant decline than usual following the summer travel season. However, food and non-alcoholic drink prices have risen, marking the first increase in food price inflation since March last year.
Chief Secretary to the Treasury Darren Jones described the overall slowdown in price rises as “welcome news for millions of families,” emphasizing the government’s commitment to restoring economic stability.
This inflation drop comes ahead of this month’s Budget, where Chancellor Rachel Reeves is expected to implement tax increases and spending cuts amounting to £40 billion. As the government navigates these economic challenges, September’s inflation data will play a critical role in shaping benefit increases scheduled for April, including universal credit and various disability benefits, which are mandated to rise by at least the inflation rate.
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Ten Dead, 35 Injured After Attack on Bourbon Street in New Orleans
A man intentionally drove his pickup truck into a crowd on Bourbon Street early Sunday morning, killing at least ten people and injuring 35 others, according to New Orleans police. The attacker then opened fire, injuring two police officers. The incident, which took place around 03:15 local time (08:15 GMT), has left the city in shock.
Police Chief Anne Kirkpatrick described the attack as deliberate, saying the assailant drove “very fast” along Bourbon Street, aiming to “run as many people as he could” before crashing through barriers. “The man was hell-bent on creating the carnage and damage that he did,” she stated. Authorities have not released details on the attacker’s condition or identity.
Witnesses described scenes of chaos as the attack unfolded. One witness, who was in the area at the time, told the BBC that they “walked past dead and injured bodies all over the street” in the aftermath. A reporter from CBS saw several injured people lying on the ground at the intersection of Bourbon and Canal streets. A video verified by BBC showed people scrambling as gunshots were heard, with one person lying motionless on the ground.
Whit Davis, a visitor from Shreveport, Louisiana, recalled being in a bar nearby when the attack began. He said that while he didn’t hear the crash or the gunshots due to loud music, panic spread quickly as people “started running and getting under tables like it was an active shooter drill.” Davis was later shocked to witness the aftermath when police allowed him to leave the bar.
In a separate account, Jim and Nicole Mowrer, visiting from Iowa, described seeing a white truck crash through a barricade at high speed, followed by gunfire. They attempted to assist the wounded but realized that the victims had already died. The Mowrers noted that the victims appeared to have been struck by the truck, not shot.
The FBI is leading the investigation, with Special Agent Althea Duncan confirming that an improvised explosive device (IED) was found at the scene. Authorities are working to determine if the device was viable.
Initial reports indicate that most of the victims were local residents. Louisiana Governor Jeff Landry expressed his sorrow, saying he was “praying for all the victims and first responders on scene.” He called the act of violence “horrific” in a social media post.
The investigation into the attack is ongoing, with authorities working to understand the motive behind the incident.
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Chinese Hackers Breach US Treasury Department Systems, Access Unclassified Documents
Chinese state-sponsored hackers infiltrated the US Treasury Department’s systems earlier this month, gaining access to employee workstations and some unclassified documents, US officials confirmed on Monday. The breach, described by the Treasury Department as a “major incident,” has prompted an ongoing investigation by the FBI and other agencies.
In a letter to lawmakers, the Treasury Department explained that the hackers, believed to be based in China, bypassed security systems through a vulnerability in a third-party service provider’s application. The compromised service, BeyondTrust, offers remote technical support to Treasury employees. While the third-party service has been taken offline, the department emphasized that no further unauthorized access has been detected.
The breach was first identified by BeyondTrust on December 8, although suspicious activity had been flagged as early as December 2. It took several days for the company to confirm that it had been hacked. The hackers reportedly used the service to remotely access several Treasury user workstations, obtaining some unclassified documents, but there were no indications of an attempt to steal funds.
The Treasury Department is working closely with the Cybersecurity and Infrastructure Security Agency (CISA) and third-party forensic investigators to assess the full impact of the breach. Initial reports suggest that the intrusion was likely carried out by a “China-based Advanced Persistent Threat (APT) actor,” a group of hackers associated with espionage activities.
“This intrusion is being treated as a major cybersecurity incident, in accordance with Treasury policy,” said Treasury Department officials. They added that investigations are still underway to determine the scope of the compromise, including the specific nature of the files accessed and whether any additional accounts or passwords were created or altered by the attackers.
China has strongly denied the allegations, with foreign ministry spokesperson Mao Ning labeling the claims “baseless.” She reiterated China’s stance against hacking and rejected what she described as “false information” aimed at targeting China for political purposes. The Chinese embassy in Washington DC also dismissed the accusations as part of a “smear attack,” urging the US to stop spreading disinformation about Chinese hacking threats.
The breach follows a series of high-profile cyberattacks attributed to Chinese espionage, including a December hack that potentially compromised sensitive telecom data in the US. The Treasury Department has pledged to continue strengthening its cybersecurity measures and will provide a supplemental report on the incident to lawmakers within 30 days.
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