UK (Commonwealth) _With the official statistics records it is indicated that UK inflation fell to its lowest level in two years last month, as consumer prices fell quicker than expected due to lower energy costs, alleviating a cost-of-living crisis and putting pressure on embattled Prime Minister Rishi Sunak.
The Consumer Prices Index was at 4.6 percent in October, according to the Office for National Statistics, falling short of Sunak’s five-percentage-point objective. Sunak is facing a crisis in his Conservative party ahead of next year’s general election.
After hitting 6.7 percent in September, CPI inflation dropped faster than expected by the Bank of England and economists. Official numbers… indicate we have cut inflation in half, fulfilling the first of the five goals set forth at the start of the year, Sunak said in a statement.
While it is encouraging that prices are no longer growing as rapidly, he continued, “we know many people are still struggling, which is why we must stay the course to get inflation all the way back down to two percent,” referring to the Bank of England’s aim. Annual inflation in the United Kingdom reached a 41-year high of 11.1 percent in October 2022, fueled by rising energy costs following Russia’s invasion of Ukraine.
Sunak, who fired Suella Braverman as interior minister and hired former Prime Minister David Cameron as foreign secretary last week, has encountered a brick block with his other aims, which include expanding the economy and halting boatloads of migrants from France crossing the Channel.
His Conservative Party is expected to lose re-election in the upcoming national election against the main opposition Labour Party. According to Grant Fitzner, chief economist at the ONS, inflation declined significantly last month due to lower energy prices following a high jump previous year.
Food costs were barely changed month on month after growing this time last year, while hotel prices declined, all of which contributed to inflation falling to its lowest level in two years, he noted. Analysts believe that if annual inflation falls sharply, finance minister Jeremy Hunt may lower taxes in his next budget presentation next week.
They go on to say that the decline in UK inflation since the beginning of the year from the greatest level in decades is mostly due to interest-rate rises by the independent Bank of England (BoE) and lower global energy costs.
Other major central banks, like the US Federal Reserve and the European Central Bank (ECB), have raised interest rates, which has helped to bring down high inflation in the world’s largest economy and the eurozone.
Consumer inflation in the United States fell more than predicted last month, according to government statistics released on Tuesday. In the year to October, the CPI inflation index grew by 3.2 percent, down from 3.7 percent.
However, global inflation remains high, with the Fed and ECB both targeting two percent annual inflation. Economists have warned that persistently rising inflation might compel central banks to retain interest rates at historically high levels for many more months – and may even be obliged to continue raising borrowing costs.
This has fueled fears that major economies may shortly suffer a slump. Despite the fact that average UK earnings have risen faster than inflation, owing in part to significant strike action, millions of Britons are still struggling to pay their expenses.
Food inflation is in the double digits, and while many individuals are now reaping the benefits of real-term salary increases, budgets remain tight, and any savings are likely to be spent, Danni Hewson, head of financial research at investing platform AJ Bell, made the point.
