UK inflation held steady at 3.8 per cent in September, confounding expectations of a rise and increasing the likelihood that the Bank of England could cut interest rates before the end of the year.
The latest Office for National Statistics (ONS) data showed consumer price inflation (CPI) unchanged from August, and below the 4 per cent forecast by the Bank and City economists. The figures signal that the disinflationary trend may be regaining momentum, providing some relief to households and policymakers.
The headline figure was driven by a drop in food price inflation, which fell from 5.1 per cent to 4.5 per cent — the first decline in six months — alongside slower rises in recreation and service costs.
Core inflation, which excludes energy and food, dipped from 3.6 per cent to 3.5 per cent, below expectations of an increase, while services inflation — a key indicator of labour costs — held at 4.7 per cent, short of the Bank’s 5 per cent forecast.
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