Inflation falls to 3.6% - and points to interest rates cut

Inflation fell to 3.6% in October, easing the path for the Bank of England to cut interest rates after Rachel Reeves's budget next week.

- Richard Partington

Overall prices have fallen for the first time in five months despite rising grocery bills

(HENRY NICHOLLS/AFP/GETTY)

The Office for National Statistics said the consumer prices index had cooled for the first time in five months, falling back from a peak of 3.8% over the summer.

Gas and electricity bills rising at a slower pace contributed most to the decline, alongside a fall in hotel prices. This was partially offset by food inflation accelerating to 4.9%.

The decline matched economists’ forecasts and was below the 3.7% rate predicted by the Bank but was still above the government’s 2% target.

Reeves has vowed to cut living costs in her highly anticipated tax and spending statement on 26 November, including measures to bring down the inflation rate to smooth the path for the Bank to cut interest rates.