Surprise annual drop to 1.7% in September raises chance of interest rate cuts, increasing budget leeway
- Analysis: Sharp inflation drop gives green light to more aggressive rate cuts
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Inflation in the UK has fallen to its lowest level in three and a half years, giving a pre-budget boost to Rachel Reeves as expectations grow for the Bank of England to cut interest rates.
Figures from the Office for National Statistics show the consumer prices index dropped sharply to 1.7%, down from 2.2% in August, in a bigger fall than anticipated in financial markets, driven by lower air fares and petrol prices.