British consumer price inflation eased to 3.6% in October, down from September’s 18-month high of 3.8%, according to official data released on Wednesday. This marks the first decline since May and provides modest relief for the government and the Bank of England.
Both the Bank of England and economists surveyed by Reuters had expected inflation to fall to 3.6%, after September’s reading stayed below the central bank’s earlier 4% forecast.
Despite this, the Bank of England paused its regular cycle of rate cuts earlier in the month. Finance minister Rachel Reeves has also said she aims to avoid tax and spending decisions in the November 26 budget that could push inflation higher.
Some economists argue that last year’s rise in the minimum wage, employer taxes, and other levies may have added up to 1 percentage point to the UK’s inflation rate. Britain still holds the highest inflation among major advanced economies.
The Bank of England recently projected that inflation will stay above its 2% target until mid-2027. The central bank pointed to strong wage growth, which many policymakers view as inconsistent with stable inflation, especially with weak productivity growth.
