UK CPI Goodbye inflation nation?

15th November 2023

Annualised inflation was down year-on-year at 4.6%, the lowest rate in two years, largely thanks to a fall in energy prices.

Annualised inflation was forecast to come in at 4.8% (Trading Economics).

Core Inflation came in at 5.7% in the 12 months to October 2023, down from 6.1% in September.

Nicholas Hyett, Investment Analyst, Wealth Club said, "At the headline level at least, these numbers are cause for celebration.

A substantial fall in inflation should help ease the cost-of-living crisis, while a pause in interest rate rises will be a huge relief to mortgage holders. Downing Street will be particularly pleased to wave goodbye to the UK's status as the inflation nation, since it means the Prime Ministers pledge to cut inflation in half is achieved a month ahead of schedule - although whether the government is entitled to celebrate a fall in global energy prices over which it has no control is rather dubious.

It's not all champagne and roses though
Core inflation, which measures domestically generated inflation rather than moves caused by swings in global commodity prices, is falling but still stubbornly high. Some of that is probably down to lingering effects of higher energy and food prices earlier in the year - as it can take time for those pressures to make their way through the system.

But, until core inflation starts to show sustainable falls, we’re not completely out of the woods and central bankers will have their fingers poised over the interest rate trigger."