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Richard Partington<\/p>\nUK inflation drops to 3.6% in October ahead of crunch budgetRichard Partington<\/p>\n
BREAKING: UK inflation dropped to 3.6% in October, easing pressure on households and providing a boost for Rachel Reeves as the chancellor prepares for her make-or-break budget next week.<\/p>\n
The Office for National Statistics (ONS) said annual inflation as measured by the consumer prices index cooled for the first time in five months, declining from a peak of 3.8% over July<\/a>, August <\/a>and September<\/a>.<\/p>\n Reeves has vowed to cut living costs in her highly anticipated tax and spending statement on 26 November, including measures to bring down the inflation rate <\/a>to smooth the path for the Bank of England to cut interest rates.<\/p>\n Threadneedle Street opened the door earlier this month to a post-budget cut in borrowing costs in December after it signalled inflation had probably peaked<\/a> amid mounting fears over the strength of the economy.<\/p>\n Borrowing costs have been cut five times since Labour came to power in July 2024, with the last reduction made in August<\/a>.<\/p>\n Our main story here: <\/p>\n Share<\/a><\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n After three months on a high plateau, inflation is beginning to ease again.<\/p>\n The drop from 3.8% to 3.6%<\/a> in the October consumer prices index sets the UK on a downward path that reduces the pressure on shoppers, businesses and the government.<\/p>\n Never mind that City economists had expected a fall last month. It appears to be a turning point back towards normality after a topsy-turvy year that everyone wants to put behind them.<\/p>\n A little more than 12 months ago the pace of prices growth fell as low as 1.7%<\/a> and it looked like inflation was beaten, but then came a resurgence in gas and electricity bills and most shockingly for the general public, a return of rocketing food prices.<\/p>\n There were global effects on prices from Donald Trump\u2019s tariffs and domestic pressures from government tax increases in the 2024 budget.<\/p>\n Rachel Reeves has given strong hints that unlike last year there will be measures in the budget next week<\/a> to accelerate the fall in prices. A cut in the 5% VAT rate on energy <\/a>is the leading contender, but there could be more.<\/p>\n On Tuesday night Reeves lent her support for a competition crackdown on the dentistry industry and vet businesses, both of which have undergone a merger mania, prompting concerns about monopoly pricing practices.<\/p>\n The chancellor knows that most governments caught in the inflation spiral of 2022-23 were kicked out of office. She is desperate that high inflation does not get added to the checklist of grievances against Labour at the next election.<\/p>\n Read more here:<\/p>\n Share<\/a>WH Smith CEO resigns after probe into accounting issues Elsewhere this morning, there\u2019s upheaval at WH Smith, as my colleague Joanna Partridge reports:<\/p>\n WH Smith\u2019s chief executive has stepped down with immediate effect, after a review found accounting failures in its North American division, prompting the retailer to slash its profit outlook.<\/p>\n Carl Cowling, who has been WH Smith\u2019s group chief executive for six years, will be replaced on an interim basis by the company\u2019s UK boss Andrew Harrison until a permanent replacement is found.<\/p>\n Cowling\u2019s departure came as an independent investigation by Deloitte found \u201cshortcomings\u201d in the retailer\u2019s North American division which overstated supplier income, which led the group to overstate profits at its US business by as much as \u00a350m.<\/p>\n Annette Court, WH Smith\u2019s chair, apologised and said the company recognised \u201cthe importance of strengthening controls, governance and reporting procedures across the group.\u201d<\/p>\n Court added:<\/p>\n Our priority now is to rebuild trust and credibility and to improve the performance and profitability of our North America division.<\/p>\n We are confident that the actions we have taken and will continue to implement over the months ahead will ensure a strong foundation for the business going forward.<\/p>\n Nearly \u00a3600m was wiped off WH Smith\u2019s market value<\/a> in August when it discovered the American accounting blunder, forcing the company to cut its forecasts.<\/p>\n The revelations saw its shares take a one-day plunge of 42%, from which they have not yet recovered, which left WH Smith reeling<\/a> shortly after the sale of its high street business<\/a>, which has been rebranded as TGJones by its new owners.<\/p>\n Deloitte\u2019s review found weaknesses in the composition of the US finance team, as well as insufficient systems, controls and review procedures for supplier income in its commercial and finance teams. It also found the group had limited oversight of US finance processes.<\/p>\n WH Smith shares are down 2.36% this morning.<\/p>\n Share<\/a><\/p>\n Meanwhile, it\u2019s a mixed picture for key stock indexes across Europe:<\/p>\n FTSE 100 is down 0.14%<\/p>\n Italy\u2019s FTSE MIB is down 0.6%<\/p>\n Frances\u2019 CAC 40 is flat<\/p>\n Germany\u2019s XETRA DAX opened up slightly higher by 0.04%<\/p>\n Spain\u2019s IBEX 35 is up 0.17%<\/p>\n Share<\/a>UK borrowing costs ease after dip in UK inflation<\/p>\n UK government borrowing costs have eased on the back of this morning\u2019s CPI data.<\/p>\n The yield on the 2-year gilt has fallen 0.028% to 3.776%<\/p>\n A view of the 2-year gilt yield following the dip in UK CPI. Photograph: Refinitiv\/Reuters<\/p>\n Meanwhile, the yield on 10-year UK government bonds is down around 0.018% at 4.539%.<\/p>\n Share<\/a><\/p>\n While inflation has dipped, Octobers\u2019 rise in food inflation is raising concerns, especially as businesses and households edge towards the Christmas season.<\/p>\n That includes unions, which are worried about how higher prices of essential goods are impacting struggling families heading into the winter months.<\/p>\n Unite general secretary Sharon Graham said:<\/p>\n Today\u2019s figures will bring no comfort to the millions of families having to choose between heating and eating this winter.<\/p>\n Food prices are going through the roof, with many essentials now costing a quarter more than they did three years ago and still rising.<\/p>\n Workers are demanding the government tackle the cost-of-living crisis and that must begin with next week\u2019s budget.<\/p>\n Karen Betts, chief executive of the Food and Drink Federation (FDF) says manufacturers are paying nearly 40% more for ingredients and energy than they were before the Covid-19 pandemic in January 2020.<\/p>\n She notes they are are also shouldering the costs of new regulations including new packaging taxes and increases to employers\u2019 national insurance contributions.<\/p>\n Betts says this has put food manufacturers on edge about further hits from next week\u2019s budget:<\/p>\n Hard-pressed food and drink companies are finding they simply have no choice but to increase prices.<\/p>\n As the budget approaches, food manufacturers are nervous, with nine in ten worried about the impact of additional costs and taxes on food prices.<\/p>\n We want instead to see government step up and support our sector, by protecting businesses from unwelcome tax surprises and partnering with us to drive growth and build resilience, to help prevent future price rises for shoppers.<\/p>\n Share<\/a><\/p>\n This marks the first drop in the rate of annual inflation in five months, and is raising expectations that the Bank of England will cut the base rate \u2013 currently sitting at 4% \u2013 at its next monetary policy meeting in December.<\/p>\n However, there are still some variables, not least the contents of the chancellor\u2019s budget next week.<\/p>\n George Brown, senior economist at Schroders, said:<\/p>\n Evidence inflation has peaked should tip the scales towards a December rate cut.<\/p>\n But any further rate cuts will largely depend on the contents of the chancellor\u2019s red box. If VAT and green levies are eliminated from household energy bills, inflation could fall by as much as half a percentage point.<\/p>\n But we remain concerned that broader price pressures will prove persistent.<\/p>\n Wage growth is still well above a target-consistent pace, especially given repeatedly weak productivity. The Bank must tread carefully given the heightened risk that high inflation becomes entrenched.<\/p>\n Share<\/a><\/p>\n Falling gas and electricity prices were the main drivers for the fall in annual inflation this month, according to the Office for National Statistics (ONS).<\/p>\n That was alongside hotels, where monthly prices fell by 2.2%, compared with a fall of 0.2% a year ago.<\/p>\n It helped offset a rise in prices for food and non-alcoholic drinks, which increased to 4.9%, with bread and cereals leading a rise in prices, up 0.02 percentage points.<\/p>\n Share<\/a><\/p>\n Chancellor Rachel Reeves will be celebrating the positive data just days ahead of her autumn budget, giving her a chance to point to tangible changes in pricing for consumers.<\/p>\n In a statement issued by HMT this morning, Reeves says:<\/p>\n This fall in inflation is good news for households and businesses across the country, but I\u2019m determined to do more to bring prices down.<\/p>\n That\u2019s why at the budget next week I will take the fair choices to deliver on the public\u2019s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.<\/p>\n Share<\/a>Share<\/a>UK inflation drops to 3.6% in October ahead of crunch budget BREAKING: UK inflation dropped to 3.6% in October, easing pressure on households and providing a boost for Rachel Reeves as the chancellor prepares for her make-or-break budget next week.<\/p>\n The Office for National Statistics (ONS) said annual inflation as measured by the consumer prices index cooled for the first time in five months, declining from a peak of 3.8% over July<\/a>, August <\/a>and September<\/a>.<\/p>\n Reeves has vowed to cut living costs in her highly anticipated tax and spending statement on 26 November, including measures to bring down the inflation rate <\/a>to smooth the path for the Bank of England to cut interest rates.<\/p>\n Threadneedle Street opened the door earlier this month to a post-budget cut in borrowing costs in December after it signalled inflation had probably peaked<\/a> amid mounting fears over the strength of the economy.<\/p>\n Borrowing costs have been cut five times since Labour came to power in July 2024, with the last reduction made in August<\/a>.<\/p>\n Our main story here: <\/p>\n Share<\/a>Introduction: UK inflation forecast to show decline from recent peak of 3.8%<\/p>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n Inflation in the UK is forecast to have dipped to an annual rate of 3.6% in October from 3.8% in September, according to City economists, in a move that could give chancellor Rachel Reeves a leg-up ahead of next week\u2019s crucial budget.<\/p>\n If forecasts prove correct, it would be the first time in five months that annual inflation, measured by the consumer price index (CPI), will have cooled.<\/p>\n A lower reading would give the government some good news, signalling some easing for particularly for hard-pressed consumers, having vowed to cut living costs in her 26 November autumn tax and spending statement.<\/p>\n It would also raise hopes of another interest rate cut from the Bank of England.<\/p>\n Morningstar\u2019s UK economist Grant Slade, who is expecting a slowdown in annual inflation in October to 3.6%, says:<\/p>\n Having reared its ugly head once more in 2025, inflation likely peaked in September when transport costs exerted upward pressure on headline CPI.<\/p>\n The disinflation process remains intact, in our view.<\/p>\n A weakening labour market and well-anchored long-term inflation expectations should allow for the impact of prior supply-side shocks to fade progressively over the coming quarters.<\/p>\n The official figures are released at 7am.<\/p>\n But barring any significant surprises, it still means inflation is holding well-above the government\u2019s 2% target, marking the 13th successive month that CPI has surpassed that level.<\/p>\n![\"Phillip](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2025\/11\/Philip_Inman.png\")
Phillip Inman<\/p>\n![\"Joanna](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2025\/11\/Joanna_Partridge,_L.png\")
Joanna Partridge<\/p>\nRichard Partington<\/p>\n