The plunge from 2.2% in August puts the rate of prices growth well below the central bank's 2% target and back in territory that we last saw in early 2021 - long before the Russian invasion of Ukraine sent energy prices rocketing.
It is also welcome news for Rachel Reeves, signalling that the Labour government is about to enjoy a period of low inflation and lower interest rates, giving her the platform to borrow for investment in this month's budget without spooking financial markets.
Lower inflation allows the Office for Budget Responsibility (OBR) to forecast lower departmental spending. For instance, September's inflation rate will set the increase for working-age benefits next April, saving billions from the welfare bill.
As the Bank is now expected to reduce borrowing costs faster, the OBR is also set to cut its outlook for the cost of financing government debt, which ballooned to more than £100bn in the 2023-24 financial year, or almost 10% of total spending.
Denne historien er fra October 17, 2024-utgaven av The Guardian.
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Denne historien er fra October 17, 2024-utgaven av The Guardian.
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