What's happened
UK inflation fell to 1.7% in September, the lowest since April 2021, driven by lower petrol prices and airfares. This unexpected decline raises expectations for a potential interest rate cut by the Bank of England next month, impacting state benefits and pensions for the coming year.
Why it matters
What the papers say
According to The Scotsman, the Office for National Statistics reported a drop in inflation to 1.7%, driven by lower petrol prices and airfares. ONS chief economist Grant Fitzner noted, 'Inflation eased in September to its lowest annual rate in over three years.' However, The Independent highlighted concerns that this decrease could lead to lower benefit increases for low-income families, with economist Lalitha Try stating, 'This temporary fall is badly timed for millions of low-to-middle income families.' The Telegraph emphasized that the decline in inflation eases pressure on public finances, potentially allowing for tax adjustments in the upcoming budget. Overall, while the inflation drop is welcomed, the implications for households and future economic policy remain complex.
How we got here
Inflation in the UK peaked at 11.1% in October 2022, prompting the Bank of England to raise interest rates to combat rising prices. The latest figures indicate a significant easing in inflation, with the Consumer Prices Index (CPI) now below the government's 2% target for the first time in over three years.
Common question
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What Caused UK Inflation to Drop Below 2%?
UK inflation has recently fallen to 1.7%, marking a significant shift in the economic landscape. This unexpected decline raises questions about the factors behind it, its implications for interest rates, and what it means for consumers and businesses. Below, we explore the key questions surrounding this development.
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How Does Inflation Impact Everyday Expenses?
Inflation affects everyone, from the cost of groceries to housing prices. With the recent drop in UK inflation to 1.7%, many are left wondering how this will influence their daily lives. Understanding the implications of inflation can help consumers make informed financial decisions. Here are some common questions about inflation and its effects on everyday expenses.
More on these topics
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The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northÂwestern coast of the European mainland.
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.