UK inflation eased to 3.6% in the year to October, down from 3.8% in September, according to the latest data from the Office for National Statistics (ONS). Although still higher than the Bank of England’s 2% target, this represents the slowest rate of price growth in four months and arrives just ahead of the Chancellor’s Autumn Budget.

What Is Driving the Latest Change?

The ONS noted that smaller rises in household energy costs were a major contributor to the slowdown. Ofgem increased the energy price cap in October, but the 2% rise was significantly lower than the 9.6% increase applied at the same point last year. Hotel prices, which typically fall between the summer and winter seasons, also declined more sharply than they did a year ago.

Not every category saw improvement, however. Food inflation climbed to 4.9%, up from 4.5% in September. Prices rose across a range of goods including bread, meat, fish, vegetables, chocolate and confectionery, although fruit prices edged down slightly.

According to the Food and Drink Federation, these pressures are linked to ingredient and energy costs, along with regulatory demands such as packaging taxes and higher National Insurance.

Position Ahead of the Budget

Chancellor Rachel Reeves commented that a key priority of the Budget is to reduce cost-of-living pressures. The specific policy measures that may be announced remain to be seen.

Prospects for Interest Rates

Even though inflation is still above the Bank of England’s target, the latest figures have strengthened expectations of a reduction in the base rate. Some economists believe this could take place at the next meeting of the Monetary Policy Committee on 18 December 2025.

What This Means for Your Business

Falling inflation is generally positive for the wider economy, often boosting confidence and encouraging customers to spend more freely. If any clients have delayed projects or paused decision-making, now could be a good time to reconnect and encourage them to resume activity.

However, cost pressures have not disappeared entirely. The ONS reported that the annual cost of raw materials for businesses continues to increase. Keeping a close eye on your expenses—and exploring ways to manage or reduce them—remains essential for maintaining profitability.

If you would like to discuss how the latest inflation trends or the Autumn Budget could affect your business, please get in touch. We are here to help!