Inflation falls to lowest level for two years

The rate of inflation has fallen to its lowest level since November 2021.

In the year to October 2023 prices rose by 4.6%, the Office for National Statistics (ONS) said this morning – down from 6.7% in September

The fall was driven by a drop of the cost of raw materials, which fell by 2.6%.

ONS chief economist Grant Fitzner said: “Inflation fell substantially on the month as last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year.

“Food prices were little changed on the month, after rising this time last year, while hotel prices fell – both helping to push inflation to its lowest rate for two years.

“The cost of goods leaving factories rose on the month. However, the annual growth was slightly negative, led by petroleum and basic metal products.”

Prime minister Rishi Sunak said: “Inflation works like a tax. It eats into the pound in your pocket, affecting the price of your food shop, your mortgage, the size of your pension pot.

“This is why halving inflation has been my number one priority. Getting it down has involved hard decisions and fiscal discipline.

“Official figures released this morning confirm we have halved inflation, meeting the first of the five priorities I set out at the beginning of this year.

“But while it is welcome news that prices are no longer rising as quickly, we know many people are continuing to struggle, which is why we must stay the course to continue to get inflation all the way back down to 2%.”

Mike Randall, chief executive of Simply Asset Finance said: “This is good news for businesses as inflation stays true to predictions with a drastic drop.

“However, our research shows that supply chain and operational costs rank at the top of small business concerns. With the Autumn Statement looming, it’s important that work is done beyond tackling inflation. Proactive measures must be taken to address these other challenges, and allow businesses to focus on core priorities, such as enhancing productivity or investing in technology to optimise their efficiency.

“As lenders, the time for action is now. Businesses need to feel confident that, regardless of economic challenges, specialists will be available to provide valuable financial support and help guide them into a more optimistic new year.”