UK Inflation Falls to 3 Year Low

The BBC is reporting that UK inflation fell unexpectedly to 1.7 per cent in the year to September, the lowest rate in three-and-a-half years.

It means the annual rate prices are rising at is now below the Bank of England’s 2 per cent target, paving the way for further interest rate cuts.

Lower airfares and petrol prices were the main drivers behind the surprise slowdown, official figures showed.

Separately, September’s inflation figure is also normally used to set how much many benefits rise next April.

UK interest rates are currently at 5 per cent.

The Bank made a first cut in August but decided to hold them last month.

Markets had already been betting on another interest rate cut in November.

The lower-than-expected inflation rate has increased the likelihood of this happening, but it could also open the door for a December cut too, according to Susannah Streeter, of investment firm Hargreaves Lansdown.