ALBAWABA – Official data released Wednesday by the United Kingdom’s (UK) Office of National Statistics showed UK inflation fell more than expected in October, relieving some pressure for Prime Minister Rishi Sunak.
The Consumer Prices Index (CPI) hit a two-year low at 4.6 percent, the ONS said, which is good news for Sunak’s government, having fallen below the five-percent target ahead of next year's general election.
UK inflation, mainly CPI inflation, slowed even more than forecast by the Bank of England and analysts, having spiked at 6.7 percent in September.
"Official figures... confirm we have halved inflation meeting the first of the five priorities I set out at the beginning of this year," Sunak said, as reported by Agence France-Presse (AFP).
"But while it is welcome news that prices are no longer rising as quickly, we know many people are continuing to struggle, which is why we must stay the course to continue to get inflation all the way back down to two percent," he said, referring to the Bank of England's target.
Annual UK inflation struck a 41-year peak at 11.1 percent in October 2022, stoked by spiking energy prices after the invasion of Ukraine by major oil and gas producer Russia.
UK inflation hit the highest level in decades, which forced the Bank of England to hike interest rates to the highest in years, causing a massive UK housing crisis, driving house prices down by the most in 14 years - Shutterstock
The drop in UK inflation in 2023, from the highest level in decades, is due to combination of interest-rate hikes from the independent Bank of England (BoE) and cooler energy prices worldwide, the ONS said.
Interest-rate hikes by other major central banks, including the US Federal Reserve and European Central Bank (ECB), also helped bring down elevated inflation worldwide and in the Eurozone.
US inflation cooled more than expected last month, government data showed Tuesday, with the CPI inflation gauge up 3.2 percent in the 12 months to October, down from 3.7 percent in September.
Global inflation remains high, however, with the Fed, BoE and ECB all having an annual inflation target rate of two percent and current rates still nearly double that, which could prompt central banks to keep interest rates at high for longer.
In fact, some AFP analysts predict some central banks may even be forced to keep on hiking borrowing costs.
Meanwhile, property crises loom over almost every major economy, from Japan through China, the Eurozone and the UK, all the way to the US.
This has fuelled worries that major economies could soon enter recession, with the economy of Japan contracting in October, China’s sluggish and Germany’s growth slowing, along with the rest of the Eurozone.
