{"id":46951,"title":"UK Inflation Slows Signalling Potential Rate Cut in December","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2025-11-20T08:03:27+00:00","modified":"2025-11-20T08:03:27+00:00","canonical_url":"https://stockmark.it/uk-inflation-slows-signalling-potential-rate-cut-in-december/","markdown_url":"https://stockmark.it/uk-inflation-slows-signalling-potential-rate-cut-in-december.md","json_url":"https://stockmark.it/uk-inflation-slows-signalling-potential-rate-cut-in-december.json","category":"UK Budget","categories":["UK Budget","UK Economy","UK Government","UK Inflation"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2025/08/stencil.default-2025-08-13T074700.134.jpg?fit=1200%2C800&quality=89&ssl=1","format":"news","language":"en-GB","content":"UK inflation has eased to a four-month low in October, underpinned by falling energy costs and subdued price growth across the services sector. New figures from the Office for National Statistics indicate that consumer price inflation fell from 3.8 percent in September to 3.6 percent in October, aligning with City forecasts and matching the Bank of England’s own projections. This marks the lowest inflation rate recorded since June.\n\nCore inflation, a measure that excludes volatile items such as food and energy, also declined from 3.5 percent to 3.4 percent. The decrease reflects broader disinflationary trends in the economy. Gas and utility prices contributed significantly to the downward momentum, with annual inflation in this category dropping to 2.2 percent, a direct result of a less pronounced rise in the Ofgem price cap compared to October 2024.\n\nOther sectors recorded similar trends. Airfare inflation retreated sharply from 5 percent to 0.9 percent, while hotel prices also softened, leading to a reduction in services inflation from 4.7 percent to 4.5 percent. Despite these positive developments, food price inflation unexpectedly increased to 4.9 percent in October, up from 4.5 percent, adding pressure on household budgets as the cost of living remains a concern. Price rises for alcohol and tobacco also accelerated slightly to 5.9 percent.\n\nWith inflation peaking earlier in 2025 following surges in energy and administered prices, the October slowdown represents the second consecutive month of easing price pressures. Market expectations now point towards the Bank of England cutting the base interest rate to 3.75 percent at the upcoming December meeting. The consensus among economists suggests that monetary policy makers are provided with more scope to reduce rates as inflation shows signs of steady decline.\n\nThe pound experienced a marginal decline against both the US dollar and the euro, reflecting market anticipation of another rate cut. Yields on two-year government bonds also fell, with bond prices rising as investors factor in a more accommodative policy stance from the central bank.\n\nChancellor Rachel Reeves has indicated the government intends further action to manage inflation and reduce household bills, with considerations including a reduction in VAT rates on utility bills and a review of the retail price index used for pricing increases. Analysts from Capital Economics forecast that the Bank of England’s two percent inflation target could be achieved by late 2026, with interest rates potentially declining further to three percent. Despite the recent progress, economists warn that a decisive move towards the target rate may not materialise before January. There are concerns that the combination of weak economic growth, a slackening labour market, and higher payroll taxes may accelerate the disinflation process in the coming year."}