UK inflation drops to 4.6% in October

The annual consumer price inflation (CPI) in the UK unexpectedly decreased to 4.6 per cent from the previous month's 6.7 per cent in October, marking the smallest increase since October 2021, according to official data released on Wednesday.

This figure came in below the anticipated 4.8 per cent, as indicated by both the Bank of England's staff forecasts and a Reuters poll of economists. Additionally, annual core inflation experienced a decline from 6.1 per cent to 5.7 per cent.

The lower inflation rate provides a rare positive development for Prime Minister Rishi Sunak, who had pledged to cut price growth in half this year. This commitment was made ahead of the anticipated 2024 election, where opinion polls currently suggest a potential loss for his Conservative Party.

Despite this positive turn, Bank of England Chief Economist Huw Pill cautioned on Tuesday that even with the expected drop to just under 5 per cent, inflation remains "much too high." 

While it signifies a significant reduction in price growth over the past year, the central bank is emphasising that it is not considering reducing interest rates from their current 15-year high. 

This stance persists despite the economy stagnating, hovering near a recessionary state.

(With Reuters Inputs)