Inflation falls by more than expected to 2-year low of 3.9 per cent

UK inflation eased back to its lowest level for more than two years last month, official figures show.

Inflation stood at 3.9 per cent last month, according to the Office for National Statistics (ONS).

It is a dramatic fall from the 4.6 per cent recorded a month earlier.

Most economists had been expecting inflation to fall to 4.3 per cent last month. Transport, recreation and culture, and food and non-alcoholic beverages were the biggest drivers of the drop.

But the decrease is less steep than the drop from September when the consumer price index (CPI) measure of inflation tumbled from 6.7 per cent.

It is also just under double the 2 per cent target aimed for by the Bank of England.

Office for National Statistics chief economist Grant Fitzner said: “Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine”.

“The biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year.

“Food prices also pulled down inflation, as they rose much more slowly than this time last year.

“There was also a price drop for a range of household goods and the cost of second-hand cars.

“Factory gate prices remain little changed over the past year, while on an annual basis the change in costs that producers pay for raw materials and fuel was negative for the sixth consecutive month”

Chancellor Jeremy Hunt reacted to the news this morning by saying the only way the government can “make life better for families who are working very hard and feeling that they are in a cost of living crisis” is to “get the economy growing sustainably”.

Hunt added: “That means you have to bring down inflation.”

“That’s why the prime minister’s main pledge at the start of this year was to halve inflation, he has more than delivered that”, he said.

“Once you do the hard work to squeeze inflation out of the system you can look forward to the kind of growth that will see people’s wages going up.”

Hunt added: “When we can, we want to bring down the tax burden.”

Rachel Reeves, the shadow chancellor, said the fall will likely come as “a relief to families”.

“However, after 13 years of economic failure under the Conservatives working people are still worse off,” she said.

“Prices are still going up in the shops, household bills are rising and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy.

“Only the Labour Party under Keir Starmer’s leadership has a long-term plan to make working people better off.” is the UK’s leading digital-only political website, providing comprehensive coverage of UK politics. Subscribe to our daily newsletter here.