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UK inflation falls sharply, relieving pressure on prime minister

LONDON (AFP) – United Kingdom (UK) inflation fell more than expected in October, data showed yesterday, easing a cost-of-living crisis and relieving pressure on British Prime Minister Rishi Sunak.

The Consumer Prices Index (CPI) hit a two-year low at 4.6 per cent, the Office of National Statistics said, dipping under a five-per cent target set by Sunak, who faces a crisis in his Conservative party ahead of next year’s general election.

CPI inflation slowed more than forecast by the Bank of England and analysts after reaching 6.7 per cent in September.

“Official figures… confirm we have halved inflation meeting the first of the five priorities I set out at the beginning of this year,” Sunak said.

“But while it is welcome news that prices are no longer rising as quickly, we know many people are continuing to struggle, which is why we must stay the course to continue to get inflation all the way back down to two percent,” he said, referring to the Bank of England’s (BoE) target.

Shoppers walking along Oxford Street in London, England. PHOTO: AFP

UK annual inflation struck a 41-year peak at 11.1 per cent in October 2022, stoked by spiking energy prices after the invasion in Ukraine.

Chief economist at the ONS Grant Fitzner said “inflation fell substantially” last month on easing energy costs following last year’s steep rise.

“Food prices were little changed on the month, after rising this time last year, while hotel prices fell, both helping to push inflation to its lowest rate for two years,” he added.

Analysts said a sharp fall in the annual inflation rate could see Finance Minister Jeremy Hunt cut taxes in his latest budget announcement due next week.

They add that the drop in UK inflation since the start of the year from the highest level in decades is thanks largely to interest-rate hikes from the independent BoE and cooler energy prices worldwide.

Interest-rate hikes by other major central banks, including the US Federal Reserve and European Central Bank (ECB), have helped bring down elevated inflation in the world’s biggest economy and the eurozone.