LONDON - Britain's inflation rate has hit a two-year low as energy bills and food prices have seen a significant decrease, according to the latest data from the Office for National Statistics (ONS). The Consumer Prices Index (CPI) rose by just 4.6% in October, marking a decline from the previous month's 6.7%.
This recent easing of inflationary pressures comes as a relief amid the economic challenges following Russia's invasion of Ukraine. A key factor in this downturn is the reduction in wholesale energy prices, which has been reflected in the energy regulator's cap on household energy bills at £1,834 annually—a 7% cut—alongside government subsidies aimed at curbing the cost of living.
The food sector also contributed to the slowing inflation rate, with October witnessing a 10.1% increase in food prices, the slowest pace since June 2022. This slowdown in food inflation is indicative of a broader trend of easing price increases across various sectors.
Policymakers are keeping a close eye on domestic price pressures, including core inflation, which excludes volatile items like food and energy. Core inflation fell to 5.7% from September's 6.1%, signaling that underlying price growth is also moderating, particularly within the services sector.
Adding context to these figures, ONS data from Tuesday indicated a slowdown in wage growth during the third quarter. Despite decelerating, wage growth remains near historical highs with an annual pace of 7.7 percent.
The combination of slowing wage growth and declining inflation could influence future monetary policy decisions as authorities balance supporting economic growth with maintaining price stability.
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