Inflation eased to 3.6% in the year to October, marking the slowest rise in prices for four months, though household budgets remain under strain as food costs picked up once more. Figures from the Office for National Statistics (ONS) show inflation fell slightly from September’s 3.8%, helped by more modest increases in domestic energy bills and a notable dip in hotel prices. Economists had forecast a slightly larger drop, but the data still arrives at a crucial moment, just days before the chancellor delivers the government’s Budget.
Chancellor Rachel Reeves said she is determined to push inflation down further and acknowledged that many families continue to feel the weight of rising living costs. Food and soft drink prices were the biggest upward influence on inflation, rising by 4.9% over the year. Essentials including bread, meat, vegetables and confectionery all saw increases, though fruit became marginally cheaper. With inflation now easing, hopes are growing that the peak has been passed, potentially paving the way for interest rate cuts in the months ahead.
ONS chief economist Grant Fitzner said lower increases in gas and electricity bills, following the latest adjustment to the Ofgem price cap, played a major role in October’s inflation slowdown. Annual inflation for household energy moved up, but nowhere near the steep rise seen a year earlier. Hotel prices also fell more sharply than usual for this time of year. However, rising fuel costs and increasing expenses for raw materials continued to put pressure on businesses.
Attention now turns to the Bank of England’s next interest rate decision on 18 December. Rates were held at 4% at the November meeting after inflation proved stubborn through much of the autumn. Analysts say a pre-Christmas rate cut now looks increasingly likely, though further reductions may be slower to follow. The long-term trajectory for prices will depend on global energy markets, commodity costs and the choices made in next week’s Budget, where tax and spending decisions could influence the pace of inflation in early 2026.
