The Canary Wharf business district can be seen in the distance amidst autumnal foliage on October 9, 2024, in London, United Kingdom. This image was captured by Dan Kitwood of Getty Images News.
In London, the Office for National Statistics announced on Wednesday that the U.K.’s inflation rate fell sharply to 1.7% in September. This figure was lower than the 1.9% expected by economists surveyed by Reuters, marking the first time the inflation rate has dropped below the Bank of England’s 2% target since April 2021. Inflation has remained near this level over the past four months, with August’s rate recorded at 2.2%.
Core inflation, which omits volatile items like energy, food, alcohol, and tobacco, was reported at 3.2% for September. This is a decrease from August’s 3.6% and falls below the 3.4% forecast from a Reuters poll. The services sector, a major part of the U.K. economy, experienced a notable easing in price increases, dropping to 4.9% last month from 5.6% in August. This decrease marks the lowest rate for the services sector since May 2022.
Core and services inflation are significant indicators for Bank of England policymakers as they consider potential interest rate cuts in their upcoming November meeting. On Wednesday morning, market projections suggested an 80% likelihood of a rate cut in November, based on the latest inflation data. Analysts on Tuesday indicated that a report from the ONS about reduced wage growth this week bolstered the argument for such a cut. The Bank of England had previously lowered its key interest rate by 25 basis points in August before choosing to hold rates steady in September.
Meanwhile, inflation in the euro zone also fell below the European Central Bank’s 2% target last month, reaching 1.8%, according to the most recent data.
This is a developing story and will be updated as more information becomes available.
