Hopes the Bank of England will lower interest rates as inflation falls

Inflation fell to a four month low last month meaning that the Bank of England could reduce interest rates before Christmas.

There are fears that food prices are increasing which will see people cut back for Christmas as the annual rate of food and non-alcoholic drinks increased to 4.9% from 4.5% in September as prices are rising 0.5% month-on-month.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) inflation fell to 3.6% in October compared to 3.8% in September.

The ONS said that there has been a slower rise in electricity and gas prices, this has pulled back the overall rates of inflation in October.

Danni Hewson, head of financial analysis for AJ Bell, said: “Although the energy price cap has gone up, it’s not gone up by as much as it did last year.

“That’ll be cold comfort for families paying more for their gas and electricity who will also be finding that food prices have been ticking back up, as staples like bread, meat and potatoes all cost more than they did even a month ago.”

Karen Betts, chief executive of the Food and Drink Federation, said: “Food and drink manufacturers are paying nearly 40% more for ingredients and energy than they were in January 2020, as well as bearing a range of newer regulatory costs, like new packaging taxes and increases to employer national insurance.

“Hard-pressed food and drink companies are finding they simply have no choice but to increase prices.”