CPI inflation falls to 4.6% in October

From the 12 months to October, inflation hit 4.6% - down from the 6.7% figure seen in September. However, monthly CPI inflation did not change in the month – compared with a rise of two percent seen in October last year.  

Consumer Prices Index including owner occupiers’ housing costs (CPIH) inflation, meanwhile, decreased from 6.3% in the 12 months to September to 4.7%. On a monthly basis, CPIH rose by 0.1% – compared with a rise of 1.6% in October 2022.  

The biggest negative contributor to the monthly change in both CPIH and CPI annual rates came from the housing and household services sector – where the annual rate for CPI was the lowest since records began in January 1950, while the second largest came from food and non-alcoholic beverages space – where the annual rate was at its lowest since June 2022.  

Responding to the news, Susannah Streeter – head of money and markets at Hargreaves Lansdown – said, while inflation has made a bigger than expected “jump down in its difficult descent”, it may still become “stuck in the mud” of viscous wage growth in the coming months.  

She added: “While this dramatic drop means inflation has hit the target promised by Rishi Sunak, it’s arguably not what the government has done but monetary policy driven by the Bank of England which is showing up in these figures. The impact of pent-up demand from the pandemic has dwindled and supply shocks caused by the war in Ukraine have also eased off.  

“The energy price cap was cut in October, which as expected has fed directly into the figures, and the price of used cars has also fallen back. There’s also been a tailing off in the annual rate of food and non-alcoholic drink inflation.  

“Price rises for vegetables have eased considerably, falling from 14.4% to 10.8%. There is finally cheer for crisp lovers, with the snacks falling in price falling by 3.4% month on month. It’s enough to burst open a bag in celebration. 

“But the party may be short-lived. At 4.6% inflation is more than double the Bank’s target and so the prospect of cuts are still a very dim and distant hope.  

“The Bank must get to grips with stopping domestically-fuelled inflation in its tracks and with wage growth stubborn, the higher for longer mantra is being repeated. Although core inflation is heading in the right direction, falling 6.1% to 5.7%, risks remain.

“The bank’s chief economist Huw Pill, speaking at the festival of economics in Bristol said it would require ‘persistent restrictiveness’ in policy so painful borrowing costs are set to linger. However, at this stage another interest rate rise looks unlikely given the Bank will want to wait for the lag effect of previous hikes to take effect.”