UK inflation drops to 4.6% as gas and electricity prices fall

The UK’s annual inflation rate fell sharply to 4.6% in October on the back of a drop in the cost of gas and electricity, outperforming City forecasts.

The steep decline in last month’s consumer prices index (CPI) reading from 6.7% in September beat the 4.8% predicted by a poll of economists for Reuters.

The fall does not mean prices are going down, only that they are rising less rapidly. Nevertheless, it is expected to ease fears that the Bank of England will increase interest rates again this year, despite being more than twice its 2% target.

It also means Rishi Sunak has achieved his target set in January of halving inflation by the end of the year from the 10.7% average in the last quarter of 2022.

At the heart of the decline was the 23% year-on-year cut in the energy price cap for the typical annual gas and electricity bill, from £2,500 last October to £1,923 the same month this year.

The price of food in October 2023 was around 30% higher than it was in October 2021.