Will falling inflation save Rachel Reeves’s Budget?

Inflation slowed to 1.7 per cent in the twelve months to September, taking the inflation rate to its lowest levels since spring 2021. While markets and forecasters had expected the inflation rate to drop below the Bank of England’s 2 per cent target at some point this year (market consensus for September was 1.9 per cent), the bigger-than-expected fall has come as a surprise, as core inflation also slowed to 3.2 per cent in the 12 months to September – down from 3.6 per cent in August. The largest contributions to the slowdown came from falling transport costs, while overall services fell to 4.9 per cent on the year, down from 5.6 per cent in August.

‘It will be welcome news for millions of families that inflation is below 2 per cent’ the chief secretary to the Treasury Darren Jones said of the news this morning.