UK inflation live: UK inflation fell to 3.6% in October

Here’s a recap on the major headlines from today:

In terms of macroeconomic data, today’s UK inflation release is the last piece of the puzzle before chancellor Rachel Reeves announces her Autumn Budget on 26 November.

“The die is cast,” said John Wyn-Evans, head of market analysis at Rathbones. In terms of economic data that could shift the chancellor’s thinking, “there is nothing of note between now and 26 November. After what feels like months of speculation, we are now at the sharp end.”

Viewed purely through the lens of inflation control, an increase in income tax – which Reeves hinted at during her unusual pre-Budget speech on 4 November – could have been a benefit, as the tax hike would have acted as a dampener on spending and, as such, had a disinflationary impact.

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But Reeves appeared to U-turn on this front last week, as the Labour government came under attack from within its own party.

“By abandoning the idea of raising income taxes, the chancellor could still be more dependent upon raising levies that increase inflation, such as taxes on any sort of consumption,” said Wyn-Evans. “Thus, we would expect the Bank of England to reserve judgement until it has seen the contents of the red briefcase.”

The last Monetary Policy Committee (MPC) meeting resulted in a 5-4 split in favour of holding interest rates at their prior level (4.0%), with four members of the panel voting to cut rates to 3.75%.

With the economic situation deteriorating and CPI inflation coming down, a rate cut in December looks very likely according to Nigel Green, CEO of deVere Group.

“We believe that there’s now a high probability of a Bank of England December rate cut,” he said.

For the moment, it appears that the Bank of England’s forecasts for the long-term trajectory of UK inflation is intact.

The good news is that this should see prices fall over the next two years. The Bank of England expects it to recede to the target level of 2% by the end of 2027.

“Looking ahead, inflation is likely to remain at similar levels over the final months of this year, but several factors should pull the headline rate down through next year,” said Edward Allenby, senior economist at Oxford Economics.

Energy prices ought to act as a drag to inflation from next year as their pace of increase slows, while Allenby also feels that food price inflation has peaked and that weaker food commodity prices and a stronger pound should bring food inflation down in 2026.

“Services inflation is expected to ease steadily due to cooling pay growth and strong base effects caused by this year’s increase in national insurance contributions,” he added.

There is some room for optimism among homeowners and prospective buyers after October’s inflation figures were released as slowing price growth offers a boost to affordability.

A December interest rate cut has become more likely because of falling inflation too, setting the stage for a further boost for mortgage payers.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “Easing inflation does bode well for affordability, as it raises the likelihood of further interest rate cuts.

“Mortgage rates have continued to fall in recent days, so a more competitive mortgage landscape, combined with more relaxed stress test rules and slowing market activity ahead of the Budget, provides an opportunity for committed buyers to capitalise.

“When a market hesitates in the face of change, it can be one of the best times to secure a deal,” she added.

Meanwhile, those who are coming to the end of their mortgage term and are shopping around for a better deal may also be able to find a better deal, but a lot depends on how long ago they fixed their rate.

Haine said: “Those coming off short-term fixes taken when rates peaked in 2023 may find better deals now. However, borrowers nearing the end of ultra-low five-year fixes secured before rates began their rapid ascent in late 2021 face a tougher outlook.

“They could see a sharp rise in monthly repayments unless they’ve significantly reduced their balance – though the blow may be softened if mortgage rates continue to ease.”

Some savers will be breathing a sigh of relief after inflation fell for the first time in five months, as slowing price growth their savings will be eroded away far slower.

But while inflation is going in the right direction, a reading of 3.6% is certainly not low – and far above the Bank of England’s target of 2%.

What is more, inflation being this far above target means it is still far higher than the interest rates offered by many savings accounts, meaning consumers are seeing their cash become less valuable in real terms.

The interest rate for the average easy access savings account is around 2.5%, according to Hargreaves Lansdown, meaning a 1.1 percentage point gap exists between the average savings account and the rate of inflation.

The good news is that while the average savings rate is lower than inflation, there are still a lot of competitive options on the market.

Mark Hicks, head of active savings at Hargreaves Lansdown, says: “The market is incredibly competitive right now – especially for easy access and cash ISA. It means it’s more important than ever to shop around and consider online banks and savings platforms, because there are still plenty of accounts leading the pack, way ahead of inflation.

For money you don’t need for a specific period, it’s also well worth considering locking in a fixed rate deal now. You can get fixed terms around 4.4%, which look increasingly attractive at a time when rates and inflation are both expected to fall from here.”

To recap: the headline rate of CPI inflation fell from 3.8% in the year to September (which Bank of England forecasters had expected to mark the high point of the current inflation cycle) to 3.6% in the year to October.

One of the big highlights in the October UK inflation data was the fall in CPI services inflation from 4.7% to 4.5%. This has been a particularly sticky part of the UK’s inflationary picture, and its cooling off points to the success of the Bank of England’s monetary tightening.

“Weaker than expected travel fares, tuition fees, and accommodation prices all [pulled] services price momentum a touch lower than market expectations,” said Sanjay Raja, chief UK economist at Deutsche Bank.

“Our suite of core services measures, which strips out some of the more volatile and erratic items in the basket, were also broadly positive – highlighting continued disinflation in the economy,” Raja continued.

He added that this gives the MPC a clearer path towards a December rate cut, with Bank of England governor Andrew Bailey likely to hold the deciding vote.

Bank of England governor Andrew Bailey indicated at the last Monetary Policy Committee meeting that future data releases before the final interest rates meeting of the year would be key to determining whether there would be a final cut in 2025.

Today’s data puts that firmly on the table in the opinion of Isaac Stell, investment manager at Wealth Club.

“Having remained elevated throughout the summer, it looks as if the inflationary descent is starting to gain momentum. The possibility of a pre-Christmas rate cut is now very much on the cards,” said Stell.

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“All eyes now turn to the Budget,” Stell continued. With the expected fiscal tightening in the form of tax rises a foregone conclusion, policy makers at the BoE will be watching closely to see how these measures affect growth and demand.”

October’s fall in UK inflation shows that “restrictive monetary policy is working”, says Daniel Casali, chief investment strategist at wealth manager Evelyn Partners.

“Importantly, service producer price inflation (a leading indicator for consumer services inflation) has also started to trend lower, suggesting further disinflation ahead in labour-intensive sectors,” he added.

The economic picture is still mixed for UK consumers despite this drop in UK inflation figures.

“An almost 10% depreciation in GBP vs the Euro is adding to the cost of European imports,” said Brad Holland, director of investment strategy at J.P. Morgan Personal Investing. “Petrol and domestic gas prices are lower than they were at the start of the year… Goods inflation pressure is moderate at the moment and services inflation remains the key focus.”

Good CPI inflation fell from 2.9% in the year to September to 2.6% in the year to October, while services inflation fell from 4.7% to 4.5%.

Holland added that with the latest UK growth figures proving lacklustre, there will be pressure on the Bank of England to cut interest rates at its final meeting in December given today’s indication that UK inflation is on its way down.

Chancellor Rachel Reeves has issued a response to the fall in UK inflation during the year to October:

“This fall in inflation is good news for households and businesses across the country, but I’m determined to do more to bring prices down,” said Reeves. “That’s why at the budget next week I will take the fair choices to deliver on the public’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”

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Policymakers at the Bank of England have been waiting for confirmation of their hypothesis that inflation is easing before cutting interest rates further. At high level, today’s inflation read seems to give them that.

While housing costs slowed their pace of increase, food and non-alcoholic beverages made the largest upward contribution to inflation in the year to October. The rate of price increases in this division increased from 4.5% in the year to September to 4.9% in the year to October.

(Image credit: Consumer price inflation from the Office for National Statistics)

UK inflation fell from 3.8% in the year to September to 3.6% in the year to October. The biggest driver to the slowdown in price increases came from housing and household services costs, which fell from 7.3% in the year to September to 5.2% in the year to October.

The latest UK inflation data is in, and confirms that the UK Consumer Prices Index increased by 3.6% in the year to October, a slowdown compared to the three preceding months.

Good morning and welcome back to live coverage. We’re just minutes away from finding out how prices changed during the year to October.

As a recap, most analysts are expecting a drop from last month’s reading of 3.8%, to somewhere around 3.5% or 3.6%.

Stay with us as we bring you live news of the latest data, plus a wealth of reaction.

It’s being widely assumed that annual inflation will have fallen between September and October, with most experts predicting a headline figure of around 3.6%.

But Sanjay Raja, chief UK economist at Deutsche Bank, thinks it could surprise to the upside. He expects UK inflation for October to come in at 3.7%.

“Larger rises in airfares and university fees, we think, will push inflation up a leg,” said Raja.

He added, though, that he expects this to “mostly unwind in November”.

Andrew Goodwin, chief UK economist at Oxford Economics, says “October’s inflation release is likely to mark the beginning of a gradual easing in price pressures.”

In brief, inflation measures the speed at which prices are rising.

Economists, particularly those at the ONS, measure price changes in a basket of goods that represent general spending patterns. Inflation typically refers to the percentage change in prices of that basket of goods over a 12-month period.

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There are various different baskets that can be analysed for different purposes, but the key one as far as most economists and policymakers are concerned is the Consumer Prices Index (CPI) – unless specified, it’s that figure we’re referring to here when we cite ‘inflation’ figures (like the 3.8% figure from September).

According to its November report, the Monetary Policy Committee (MPC) – the group within the Bank of England responsible for setting interest rates – expects inflation to fall from the September figure of 3.8% thanks to cooling in energy and food price increases as well as the inflationary impacts of the last Autumn Budget having worked their way through the system.

As such the MPC expects inflation to fall to 3.5% in the fourth quarter of 2025.

For October in particular, analysts expect to see a drop in inflation from the 3.8% level it sat at for the three preceding months.

“We estimate UK inflation will slightly improve in October’s figures, slowing to 3.6% – a 0.2% improvement on the previous month,” said Grant Slade, UK economist at Morningstar. “The disinflation process remains intact, in our view. A weakening labour market and well-anchored long-term inflation expectations should allow for the impact of prior supply-side shocks to fade progressively over the coming quarters.”

Robert Wood and Elliott Jordan-Doak, chief UK economist and senior UK economist respectively at Pantheon Macroeconomics, forecast October inflation to fall to 3.5%.

Inflation has been on the rise for much of 2025, climbing from 3% in January to 3.8% in September, the latest month for which data is available.

Price growth fell in the first quarter of the year, going down to 2.6% in March. However, a combination of bill increases, minimum wage hikes, and disruption to global trade meant this decline was short-lived.

Inflation jumped 0.9 percentage points between March and April, reaching 3.5% – it was the largest month-on-month increase in inflation since October 2022, at the height of the cost of living crisis.

Since then, inflation has remained stubbornly high, climbing to an 18-month high of 3.8% in July and remaining at that level in August and September.

The ONS will release the latest UK inflation figures at 7am tomorrow (19 November). We’ll cover the release live here, and bring you live reaction afterwards.