UK consumer price inflation fell to 3.6% in October

Both the BoE and economists polled by Reuters had expected CPI would drop to 3.6% in October, after inflation in September did not reach the 4% mark which the central bank had previously forecast. Even so, the BoE paused its quarterly pace of rate cuts earlier this month and finance minister Rachel Reeves has said she will seek to avoid tax and spending measures that might add to inflation in her annual budget on November 26.

British consumer price inflation fell to 3.6% in October from September's joint 18-month high of 3.8%, official figures showed on Wednesday, the first drop since May and one which offers some relief to the government and the Bank of England. Both the BoE and economists polled by Reuters had expected CPI would drop to 3.6% in October, after inflation in September did not reach the 4% mark which the central bank had previously forecast.

Even so, the BoE paused its quarterly pace of rate cuts earlier this month and finance minister Rachel Reeves has said she will seek to avoid tax and spending measures that might add to inflation in her annual budget on November 26. Some economists estimate that a higher minimum wage, increased taxes on employers and other levies she announced last year have added as much as 1 percentage point to Britain's inflation rate, which remains the highest among major advanced economies.

Earlier this month the BoE forecast inflation would remain above its 2% target until mid-2027, largely due to wage growth that is faster than many BoE policymakers think is consistent with on-target inflation, given sluggish productivity growth.

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