Inflation drops to 1.7%

Consumer price Inflation, (CPI) dropped to 1.7% in September according to the latest figures from the Office for National Statistics (ONS), down from 2.2% in August 2024, and well below its recent peak of 11.1% in October 2022.

Lower transport costs, mainly driven by lower motor fuel and air fares were the main contributors to the drop. For motor fuels, the average price of petrol fell by 5.5 pence per litre between August and September 2024 to stand at 136.8 pence per litre, down from 153.6 pence per litre in September 2023. Diesel prices fell by 6.0 pence per litre in September 2024 to stand at 141.8 pence per litre, down from 157.4 pence per litre in September 2023. However, Food and non-alcoholic beverage prices rose by 1.8% in the year to September, up from 1.3% in August 2024. This is the first time since March 2023 that the annual rate of inflation for food and non-alcoholic beverages has strengthened. The annual rate of 1.8% is down from a recent high of 19.2% in March 2023, the highest annual rate seen for over 45 years.

This latest news on inflation does increase the likelihood of an interest rate cut in the near future. It is still not a certainty though as other factors, such as the threat further escalation in the Middle East are still a major concern.

Contributions to change in the annual inflation rate in the UK between August and September 2024

Source: ONS