UK inflation has eased to 1.7%, dipping well below the Bank of England target for the first time since 2021, according to the Office for National Statistics (ONS).
It’s a drop on the 2.2% recorded in last month’s Consumer Prices Index (CPI).
The Bank of England has been trying to bring inflation down by keeping interest rates higher.
Money blog: Shock fall puts inflation below target for first time in three years
It recently trimmed the base borrowing rate to 5% and today’s inflation figure is expected to increase the likelihood of further cuts – welcome news for people with mortgages.
A lower inflation rate doesn’t mean prices are falling – only that they are rising more slowly.
Inflation peaked at 11.1% in October 2022 after energy prices soared due to the start of the Ukraine war.
It fell to 2% in May and July this year, but then edged higher again.
The last time it was below the target – which is set by the government – was April 2021, when it was 1.5%.
The latest drop in inflation, which covers the 12 months to September, was mainly driven by falling fuel costs.
Mortgage holders can now look forward to what looks like an almost certain cut in interest rates from the Bank of England when it meets on 7 November.
A reduction from 5% to 4.75% was already viewed by financial experts as highly likely.
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