In a welcome piece of positive economic news for the government, CPI inflation dropped modestly in October to 3.6% from 3.8% in September.

It was the first drop in CPI for seven months although inflation remains ‘sticky’, experts said.

ONS said the Consumer Prices Index (CPI) rose 3.6% in the 12 months to October. On a monthly basis, CPI rose 0.4% in October, compared with a rise of 0.6% in October 2024.

Housing and household services formed the biggest downward pressure on the CPIH and CPI annual rates. Food and non-alcoholic beverages were the biggest upward pressures. Food inflation has proved particularly difficult to curb.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose 3.8% in the 12 months to October, down from 4.1% in September.  On a monthly basis, CPIH rose 0.4% in October, compared with a rise of 0.6% in October 2024.

Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose by 3.7% in the 12 months to October, down from 3.9% in the 12 months to September. ONS said the CPIH goods annual rate fell from 2.9% to 2.6%, while the CPIH services annual rate fell from 4.9% to 4.6%.

Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.4% in the 12 months to October, down from 3.5% in the 12 months to September. The CPI goods annual rate fell from 2.9% to 2.6%, while the CPI services annual rate fell from 4.7% to 4.5%.

The older measure of inflation, RPI, fell from 4.4% in September to 4.2% in October.

Luke Bartholomew, deputy chief economist, at Aberdeen said: "With inflation broadly coming in as expected, the path is now clear for a December rate cut from the Bank of England.

"Inflation is likely to continue to moderate from here as weakness in the labour market means underlying inflation pressures are fading. Indeed, the upcoming Budget is likely to involve measures specifically designed to push down on inflation in things like energy prices, while the overall degree of fiscal consolidation is also likely to weigh on growth and inflation in the medium term. All this means interest rates are likely to fall further next year, perhaps down to 3% or so." 

Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group, said: “Today’s fall in inflation to 3.6% will no doubt be welcome news for the Chancellor as she finalises next week’s Budget. It suggests the worst of the recent inflation surge is behind us, but persistent price rises for everyday basics like food underlines that we are not out of the woods yet." 

“Although the direction of travel is improving, the wider economic backdrop remains fragile. Growth has been subdued all year, and the labour market is now cooling at a faster pace. The economy is clearly at a point of significant risk as we move towards 2026."