UK inflation rate dropped to 1.7%, which is below the Bank of England's target of 2% and the lowest rate since April 2021.
Joe Nellis, MHA’s Economic Advisor, comments on today’s drop in inflation rate:
While core inflation remains higher than desired at 3.2%, the headline inflation rate dropping to a remarkable 1.7% – comfortably below the Bank of England's target of 2% and the lowest rate since April 2021 – indicates that we can finally see the light at the end of the tunnel in the fight against inflation.
This significant milestone comes a day after wage growth, one of the most impactful inflationary pressures, dropped below 5% for the first time in over two years. This sign of stability is positive news for the Government ahead of the Budget later this month, as they look to showcase Britain as a good bet for domestic and international investment.
While rising fuel bills over winter and the ongoing tensions in the Middle East will most likely cause the headline inflation rate to rise again in the coming months, the achievement of a 1.7% rate is clear evidence that the measures put in place to tackle inflation are starting to bear fruit and that inflation may be kept under relative control across the colder months.
This will have a significant influence on the Monetary Policy Committee when they meet next in early November. We can expect to see a cut to interest rates for the second time this year, providing further relief to businesses and consumers alike, and both may even receive the timely present of a further cut when the Committee meet again six days before Christmas Day.”
