[UK] Inflation slows to 4.6% meeting government pledge

[UK] Inflation slows to 4.6% meeting government pledge
16 Nov 2023

In the UK, inflation fell sharply in October to its lowest rate in two years, primarily as a result of lower energy prices, BBC News reports.

Inflation dropped to 4.6 per cent in the year to October, down from 6.7 per cent the previous month.

The figure reportedly means that a government pledge to halve inflation by the end of the year has been met early.

However, there is a limit to how much credit ministers can take for the fall as energy prices settle.

Economists have attributed the main reason inflation has fallen from its peak of 11.1 per cent in October 2022 to a fall this month in the energy price cap, which limits what suppliers can charge consumers per unit of energy.

In addition, they note the Bank of England's decision to raise interest rates, in a bid to cool demand in the UK economy and slow price rises.

Rates currently stand at 5.25 per cent - a 15-year high - which has reportedly pushed up mortgage costs but also meant higher savings rates.

Grant Fitzner - chief economist at the Office for National Statistics (ONS) - told BBC News that inflation fell as "last year's steep rise in energy costs has been followed by a small reduction in the energy price cap this year".

Mr Fitzner added that food prices barely changed last month but said hotel prices had fallen.

Despite the signs pointing to the cost of living easing, many households will not feel better off, especially when it comes to energy bills.

Gas and electricity prices may be lower than last year but the majority of households will actually pay more for energy this winter than last because government support for bills is no longer in place.

Falling inflation also does not mean that most goods and services are cheaper to buy, only that prices are rising less quickly.


Source: BBC News

(Quote via original reporting)

In the UK, inflation fell sharply in October to its lowest rate in two years, primarily as a result of lower energy prices, BBC News reports.

Inflation dropped to 4.6 per cent in the year to October, down from 6.7 per cent the previous month.

The figure reportedly means that a government pledge to halve inflation by the end of the year has been met early.

However, there is a limit to how much credit ministers can take for the fall as energy prices settle.

Economists have attributed the main reason inflation has fallen from its peak of 11.1 per cent in October 2022 to a fall this month in the energy price cap, which limits what suppliers can charge consumers per unit of energy.

In addition, they note the Bank of England's decision to raise interest rates, in a bid to cool demand in the UK economy and slow price rises.

Rates currently stand at 5.25 per cent - a 15-year high - which has reportedly pushed up mortgage costs but also meant higher savings rates.

Grant Fitzner - chief economist at the Office for National Statistics (ONS) - told BBC News that inflation fell as "last year's steep rise in energy costs has been followed by a small reduction in the energy price cap this year".

Mr Fitzner added that food prices barely changed last month but said hotel prices had fallen.

Despite the signs pointing to the cost of living easing, many households will not feel better off, especially when it comes to energy bills.

Gas and electricity prices may be lower than last year but the majority of households will actually pay more for energy this winter than last because government support for bills is no longer in place.

Falling inflation also does not mean that most goods and services are cheaper to buy, only that prices are rising less quickly.


Source: BBC News

(Quote via original reporting)

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