UK inflation drops to 1.7% - well below target for first time since

UK inflation has eased to 1.7%, dipping well below the Bank of England target for the first time since 2021.

It’s a drop on the 2.2% recorded in last month’s Consumer Prices Index (CPI). Analysts had expected a fall, but only to 1.9%.

The Bank of England (BoE) has been trying to bring inflation down by keeping interest rates higher.

Money blog: Shock fall puts inflation below target for first time in three years

It recently trimmed the base rate to 5% and today’s inflation figure is expected to increase the likelihood of further cuts – welcome news for people with mortgages.

However, it could mean people’s benefits go up less than they may have been expecting.

Falling inflation doesn’t mean things are getting cheaper – only that prices are going up more slowly.

The 1.7% rate published by the Office for National Statistics (ONS) measures the overall rise in prices during the 12 months to September 2024.

Inflation peaked at 11.1% in October 2022 after energy prices soared at the start of the Ukraine war.

It fell to 2% in May and July this year, but then edged higher again.

The last time it was below the government’s target was April 2021, when it was 1.5%.

The latest drop in inflation was mainly driven by falls in the cost of fuel and air fares, said the ONS.

On the flip side, inflation on food and non-alcoholic drinks went from 1.3% to 1.8% – the first increase since March last year.

But “core inflation” – which strips out volatile elements such as food and energy and gives a more reliable picture – fell from 3.6% to 3.2%.

Mortgage holders can now look forward to what looks like an almost certain cut in interest rates from the Bank of England when it meets on 7 November.

A reduction from 5% to 4.75% was already viewed by financial experts as highly likely.