UK Inflation Falls to Four-Month Low, but Food Prices Continue to Rise
The UK inflation rate dropped to 3.6% in the year to October, reaching its lowest level in four months. Despite this improvement, the cost of food rose again—highlighting the continued pressure on household budgets.According to the Office for National Statistics (ONS), the slowdown in inflation was largely driven by smaller increases in household energy bills and lower hotel prices. Economists had expected a slightly sharper fall to 3.5%.
The latest inflation figures arrive one week before the UK government’s highly anticipated Budget.
Government Response: “Determined to Bring Prices Down”
Chancellor Rachel Reeves welcomed the fall in inflation but acknowledged that the cost of living crisis remains a major concern.
“I recognise that inflation and the cost of living is still a big burden on families across the country,” she said.
The upcoming Budget is expected to focus on easing financial pressures through a mix of tax rises and spending cuts aimed at stabilising public finances.
Food Price Inflation Rises Again
Food and non-alcoholic drinks were the biggest contributors to higher prices in October.
Food inflation increased to 4.9%, up from 4.5% in September.
Prices rose for: Bread, Meat, Fish, Vegetables, Chocolate & confectionery
Meanwhile, fruit prices saw a slight decline.
The Food and Drink Federation said the rise was linked to higher ingredient and energy costs, alongside regulatory pressures such as packaging taxes and increased National Insurance contributions.
Energy Prices and Hotels Help Push Inflation Down
Despite rising food costs, overall inflation slowed due to:
Lower household energy costs
Gas and electricity prices rose more slowly than last year thanks to a smaller increase in Ofgem’s energy price cap—2% this year compared with 9.6% last year.
Falling hotel prices
Hotel rates typically decline between summer and Christmas, but this year’s drop was sharper than usual.However, fuel prices increased, putting pressure on drivers and delivery costs.
What Does This Mean for Interest Rates?
Although inflation remains above the Bank of England’s 2% target, the slowdown has boosted hopes that interest rates may fall in the coming months.
At its November meeting, the Bank held interest rates at 4%, citing “sticky” inflation.
Both core inflation (excluding food and energy) and services inflation eased in October—suggesting a downward trend.
Future inflation will depend on factors such as:
Global energy costs
Commodity prices
Climate-related disruptions
Policy decisions in the upcoming Budget
Political Reactions
Shadow Chancellor Sir Mel Stride criticised Labour, saying inflation has stayed above target since the last Budget.
Liberal Democrat Deputy Leader Daisy Cooper urged the government to cut energy bills and reduce VAT for hospitality businesses.
Relief for Families and Borrowers
Financial experts say the latest data offers a sense of relief after months of persistent price increases.
Lower inflation could eventually lead to lower borrowing costs—helping mortgage holders and businesses.
