UK Inflation Slows to 3.6% as Energy Costs Ease

UK inflation slowed to 3.6% in October, a modest but notable drop from 3.8% in September, according to the latest Office for National Statistics figures. The slowdown comes as energy bills and housing costs ease, offering some relief to households facing higher living expenses this year.

Energy costs, particularly gas and electricity, contributed most to the slowdown, following changes in the regulated energy price cap. Hotels also recorded lower prices, adding to the downward pressure. However, food prices continued to rise, with inflation creeping up from 4.5% to 4.9%, driven by high global demand for poultry and reduced UK cattle herds pushing beef costs higher.

Other food items have seen spikes too. Poor cocoa and coffee harvests have pushed chocolate and coffee prices to record levels, while fuel prices remain a concern. Petrol and diesel costs have climbed to their highest in seven months, influenced by global supply and demand, despite a minor cut in fuel duty.

Businesses continue to face higher input costs, with raw material prices and factory gate prices rising. These pressures, combined with recent policy changes, have influenced prices in sectors like supermarkets, which pass on costs to consumers.

Economic growth remains subdued, with output increasing just 0.1% in the third quarter. The labour market shows weakness, with unemployment edging up to 5% and wage growth slowing.

Analysts expect inflation to gradually ease in the coming months, cushioning household spending power. However, global shocks and upcoming budget measures could affect the pace of this slowdown.