As energy prices decline, inflation drops to a two-year low of 4.6%.

The annual inflation rate in the UK has decreased to 4.6%, mostly as a result of lower energy prices.

According to the Office for National Statistics (ONS), the lower energy price cap that was placed on households at the beginning of October was the main reason for the annual rate’s decline from 6.7% in September to 4.6% last month. The worst of the cost of living crisis was brought on by an unparalleled spike in pre-winter energy bills as a result of the war in Ukraine. The food bill was rising due in part to the war, but in October it slowed down even more and came down to 10.1%, the lowest level since June of last year.

Since earnings growth has been outpacing inflation since the end of the summer, the lower consumer prices index (CPI) inflation figure is welcome for household spending power even though it is still high. Given that the prime minister’s promise to cut the rate of inflation by half this year is currently being fulfilled, this may bring some relief to Downing Street.

The prime minister, Rishi Sunak, underlined the necessity of carrying out additional efforts to bring inflation down to the Bank of England’s target rate of 2%. Core inflation, which takes energy and food prices out of the equation, decreased from 6.1% to 5.7%. It is now the intention of policymakers for wage increases to gradually approach the inflation rate in order to prevent an increase in economic demand that might lead to price inflation.

If there are no more price shocks, financial markets indicate that the Bank may announce a reduction in interest rates by May of the following year. An additional factor to the problem of rising living expenses is the cost of borrowing.