The Office for National Statistics (ONS) has reported that their inflation measure, the Consumer Prices Index (CPI), fell to 1.7% in September. This unexpected drop marks the lowest inflation rate in over three years.

Decreases in airfares and petrol prices were the primary factors behind this reduction. As the Bank of England targets an inflation rate of 2%, this decline may give them scope to lower interest rates further when they meet in November. There is also speculation that a second rate cut could follow in December.

The September inflation figure is particularly significant as it is typically used to determine the increase in many benefits the following April, including Universal Credit, disability benefits, and carer’s allowance. Lower inflation could result in smaller increases for these allowances.

However, the reduction in inflation may be short-lived, as rising energy prices in October could change the situation once again.

See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest