Inflation finally going in the right direction – with interest rate cut on the cardspublished at 07:44 GMT
Faisal Islam
Economics editor
A pleasant surprise on the inflation numbers paves the way for a pre-Christmas interest rate cut with the promise of more next year.
All the main categories of purchase contributed to the inflation slowdown, especially food, drink, clothing and restaurant prices.
All the inflation measures are now finally going in the right direction, with the recent bump in inflation now shown to have peaked.
Underlying measures of inflation in the service sector, which exclude the most volatile components, are down.
“Core” inflation, which excludes the direct impact of energy and food, is at its lowest rate for over four years.
Measures announced at the Budget are also expected to knock a further 0.5% off headline inflation by spring next year, raising the prospect of inflation much closer to the Bank of England’s target.
The message from the Bank, as well as its voting split at its rate decision tomorrow, will give an eagerly awaited indication of how many more rate cuts to expect next year amid stagnant growth and a slowing jobs market.
