The latest data from the Office for National Statistics (ONS) shows that UK inflation eased in October 2023, but remains elevated. The Consumer Prices Index (CPI) rose by 4.6% in the 12 months to October, down from 6.7% in September. On a monthly basis, CPI did not change in October, compared with a rise of 2.0% in October 2022.
The fall in the annual inflation rate was driven by a decline in the price of housing and household services. The annual rate for housing and household services was the lowest since records began in January 1950.
Despite the easing in inflation, it remains well above the Bank of England’s 2% target. The Bank has been raising interest rates in an effort to bring inflation down.
The ONS said that the outlook for inflation is uncertain. It said that the fall in inflation in October was partly due to temporary factors, such as the government’s energy price cap. It also said that the war in Ukraine and the ongoing supply chain disruptions could continue to put upward pressure on prices.
Key Points
- UK inflation eased in October 2023, but remains elevated but has decreased significantly
- The Consumer Prices Index (CPI) rose by 4.6% in the 12 months to October, down from 6.7% in September.
- On a monthly basis, CPI did not change in October, compared with a rise of 2.0% in October 2022.
- The fall in the annual inflation rate was driven by a decline in the price of housing and household services.
- Despite the easing in inflation, it remains well above the Bank of England’s 2% target.
- The outlook for inflation is uncertain.
What Does This Mean for Businesses and Consumers?
The fall in inflation is a welcome development for businesses and consumers. However, it is important to note that inflation remains elevated. Businesses will need to continue to manage their costs carefully, and consumers will need to be mindful of their spending.
Positive Signs
Despite the challenges, there are a number of positive signs for the UK economy. The economy grew by 0.5% in the third quarter of 2023, and unemployment is at a near-50-year low. The government is also investing heavily in infrastructure and skills, which should support long-term growth.
Businesses are also showing signs of optimism. The latest CBI survey of businesses found that expectations for future activity are at their highest level since 2017. Businesses are also planning to invest more in the coming months.
Conclusion
The UK economy is facing a number of challenges, but there are also a number of positive signs. The fall in inflation is a welcome development, and the economy is showing signs of growth. Businesses are also optimistic about the future. With careful management of the economy, the UK should be able to overcome the challenges it faces and achieve sustainable growth in the years to come.
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