THE UK's inflation rate has fallen to 4.6% in October, official figures show.
The Consumer Price Index level of inflation deceased from 6.7% in September, according to the Office for National Statistics (ONS).
Inflation is now at its lowest level in two years, putting the government on track to meet its target to halve inflation by the end of the year.
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: “Inflation fell substantially on the month as last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year.
“Food prices were little changed on the month, after rising this time last year, while hotel prices fell, both helping to push inflation to its lowest rate for two years.”
Energy bills were capped at £2,500 last year for the typical household, but this year, industry regulator Ofgem has capped bills at £1,834 for the typical household as prices have fallen.
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Inflation is a measure of how the price of goods and services has changed over the past year.
It has fallen back since hitting a 41-year high of 11.1% last October.
The largest driver of the slowdown in inflation came from house prices, which saw the lowest CPI rate since records began in 1950.
Falling food inflation also contributed to the decline as supermarkets offer up greater discounts in a bid to win customers.
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Food and non-alcoholic drink inflation eased to the lowest level since June last year, providing some relief for households squeezed by the higher cost of living.
Prime Minister Rishi Sunak said: “In January I made halving inflation this year my top priority.
"I did that because it is, without a doubt, the best way to ease the cost of living and give families financial security.
“Today, we have delivered on that pledge.”
The Prime Minister had pledged to halve inflation to about 5.4% by the end of the year.
It comes after official figures revealed that wages increased in September by 1% – the highest increase in real wages since the three months to September 2021.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said: "This dramatic drop suggests that the UK has turned the corner in its battle against soaring inflation, particularly given the fall in core inflation, which indicates that underlying price pressures are also easing."
What it means for your money
High inflation means that the cost of everyday essentials is rising and therefore your money doesn't go as far.
When inflation drops it doesn't mean that prices have stopped rising it just means that they are rising at a slower rate.
Alice Haine, personal finance analyst at Bestinvest, said: " Softening inflation is positive news for households as it means incomes might be less stretched than they have been.
"Some households are already taking comfort from bumper pay rises, as average wage growth is now outstripping inflation, so a retreat in price rises might feel like a double win.
"However, the boost to their purchasing power should not be considered a signal to loosen household budgets. "
The Bank of England (BoE) and the UK's central bank can hike its base rate to try and bring inflation down.
This is good news for people who have savings, as they might see a boost.
It is bad news for homeowners, as it also means interest rates on mortgages rise meaning more pressure for homeowners.
But falling inflation offers some home to mortgage holders and prospective buyers, who will be hoping for interest rate cuts.
The Bank’s Monetary Policy Committee (MPC) held the base rate at 0.25 percentage points to 5.25% earlier this month.
This was the second time in a row that the bank decided to hold the base rate, easing pressure on homeowners facing rising mortgage rates.
Interest rates could be cut by the Bank of England as soon as May, experts are now predicting.
Analysts at Wall Street financial services giant Morgan Stanley said falling energy costs will bring down inflation — paving the way for reducing the current high of 5.25 per cent.
The US bank predict rates could be a full point down to 4.25 per cent by the end of next year.
The Central Bank will meet again on December 14.
David Hollingworth, associate director at L&C Mortgages said: "Two year fixed rates have edged below 5% in the last couple of weeks, with major players like Halifax and HSBC joining the leading pack today.
"Five year rates are nudging closer to 4.5% and could dip below that mark in coming weeks.
"I’d expect to see more lenders following the more sharply priced competition and improvements look set to continue.
"That will be welcome news to borrowers that were facing substantially higher rates only a few months ago, although those coming to the end of an ultra low fixed rate will still be seeing a sharp rise in payments.
"Shopping around and taking advice will remain the name of the game in a shifting market.”
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