Inflation Slows to 3.6% in October Amid Weaker Housing and Energy Prices
Consumer Price Index (CPI) inflation in the UK slowed to 3.6% in October, down from 3.8% in September. This slowdown was primarily driven by weaker housing effects and relief in energy prices following changes to the Ofgem price cap, with gas and electricity prices rising less than they had a year ago.
Hotel prices fell during the period, while food prices experienced an increase. Additionally, annual costs of raw materials for businesses rose, and factory gate prices also saw an uptick.
Despite the fall in inflation, there is some uncertainty about whether the peak pace of price rises has passed for the economy. The Bank of England (BoE) is expected to adopt a cautious stance on rate cuts, with markets currently anticipating a 0.25 percentage point cut to the Bank Rate next month. The Bank Rate remains at 4% following a close 5-4 vote to hold it steady.
BoE forecasts indicate that the 2% inflation target is not expected to be achieved until early 2027. Meanwhile, unemployment has risen to 5.0% from 4.8%, and wage growth is continuing to slow. GDP growth in the third quarter of 2025 slowed significantly to 0.1%.
Attention is now focused on the upcoming Budget by Chancellor Rachel Reeves, with previous budget measures since April being criticized for contributing to higher costs.
