UK inflation eased to 3.6% in October, down from 3.8% in September, offering households and businesses a small but timely reprieve ahead of next week’s Autumn Budget. The slight drop strengthens expectations that the Bank of England could cut interest rates in December, with voices across the financial, property, and business sectors calling for swift action.

 

Economists Say the Slowdown Was Expected

George Lagarias, Chief Economist at Forvis Mazars, said the fall was “no surprise,” noting all major inflation components came in lower than forecast.

 

“Given the slowdown in the housing market, it becomes more imperative for the Bank of England to act sooner rather than later.”

 

Mortgage Market Hopes for a “Christmas Present”

Richard Pike, chief sales and marketing officer, said the easing in inflation will be a relief for households.

 

“It’s a much-needed pre-Budget boost… The drop in inflation, a cooling labour market and the prospect of fiscal tightening strengthen the case for a December rate cut.”

 

He added that lower rates could unlock borrowing capacity and support mortgage activity.

 

Business Sector Welcomes Relief but Warns of Mixed Signals

Neil Rudge, Chief Banking Officer for Commercial at Shawbrook, called the fall “good news,” though he noted many SMEs are still grappling with higher costs, including last year’s NICs rise.

 

“Some businesses will be holding back for now, while others continue to push ahead. External finance remains pivotal.”

 

Property Market Eyes the Budget With Caution

Nick Hale, CEO of Movera, said the fall in inflation raises the chances of another rate cut this year but warned the Budget could significantly disrupt property transactions.

 

“A mansion tax or higher Stamp Duty would hit volumes hard… while Stamp Duty relief could spark a sudden surge.”

 

He stressed the need for greater digital investment to strengthen the transaction process.

 

Later-Life Borrowers Encouraged to Act Now

Simon Webb, managing director at LiveMore, said the downward inflation trend offers hope but noted that rate decisions now hinge on the Budget.

 

“For the later life lending market, now is the time to lock in a deal before the Budget throws any spanners in the works.”

 

Healthcare Costs Still Rising Faster Than CPI

Despite the small fall in CPI, medical inflation remains far higher. Glenn Thomas, CEO at Howden, warned businesses face increases of 7% plus CPI on employee benefits next year.

 

“Employers are being forced to rethink benefits as NHS pressure drives more people toward private healthcare.”

 

As the Budget approaches, the modest cooling in inflation has raised expectations—but the Government’s decisions next week, and the Bank of England’s response, will determine whether today’s relief turns into real momentum.

 

 

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