UK inflation at 3.6% in October, boosting chance of December rate cut

The U.K.’s inflation rate cooled to 3.6% in October, according to the latest data from the Office for National Statistics.

Economists polled by Reuters had expected a rate of 3.6% in the twelve months to October, down from 3.8% in September.

Core inflation, excluding energy, food, alcohol and tobacco, rose by 3.4% in the year to October, down from 3.5% in September.

The Bank of England had previously forecast that inflation would peak at 4% — double the central bank’s target — in September, before gradually cooling into next year.

Economists expect the central bank will cut interest rates at its next meeting in December, as inflation cools and growth remains stubbornly low; the U.K. economy grew a meager 0.1% in the third quarter, preliminary figures released last week showed.

For now, however, all eyes are on the U.K. Treasury’s Autumn Budget, which will be announced on Nov. 26, with analysts looking to see the extent of expected tax rises, which could be disinflationary.

“Looking ahead, the Autumn Budget will likely mark the next most important inflation forecast update. Speculation around lower energy bills, indexation costs, duties, and food prices remain rife,” Sanjay Raja, chief U.K. economist at Deutsche Bank, said in analysis ahead of the inflation data.

“We expect the Chancellor [Rachel Reeves] to push through some modest measures to pull down on prices come 26 November. This will give us a good sense of where 2026 inflation will land,” he said.

This is a breaking news story, please check for further updates.