Inflation Falls to 4.6% as Government Meets Target

Labour’s shadow chancellor, Rachel Reeves, offers the first response to the news.

“The fall in inflation will come as some relief for families struggling with the cost of living,” she notes.

However, she adds a cautionary note: “But now is not the time for Conservative ministers to be popping champagne corks and patting themselves on the back. After 13 years of economic failure under the Conservatives, working people are worse off with higher mortgage bills, prices still rising in the shops, and inflation twice as high as the Bank of England’s target.”

Energy Prices Contribute to Lower Inflation

The recently reported inflation rate has outperformed expectations; most analysts had anticipated it to ease to 4.7%.

Grant Fitzner, chief economist at the ONS, explains, “Inflation fell substantially this month as last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year.”

Government on Course to Fulfill Pledge

At the beginning of the year, Rishi Sunak unveiled five pledges for 2023, with the top priority being the halving of inflation by year-end.

In the three-month period between October and December 2022, inflation was at 10.7%, and the government aims to reduce it to 5.3%. While today’s expected fall doesn’t technically mean the government has met its full-year target, it does indicate that it is on track. The figure could fluctuate in the upcoming data for November and December.

Understanding Core Inflation

Inflation can be calculated in various ways, but the primary measure reported is the Consumer Prices Index (CPI).

Core inflation, however, excludes the prices of energy, food, alcohol, and tobacco, providing an indicator of how fast prices are rising in goods and services.

This measure stood at 6.1% in September, slightly down from 6.2% in August. The Bank of England considers this number, along with CPI, when deciding whether to alter interest rates.

Source : https://www.bbc.com/news/live/uk-67423724