Inflation has fallen to its lowest level in two years, so what does this mean for your wallet?
Data from the Office for National Statistics (ONS) shows that the inflation rate – the cost of goods and services – was 4.6% in October, down from 6.7% a month before.
It is a "significant" drop, said MoneyWeek, as it means the government has met its pledge to halve inflation this year, but the rate remains "substantially higher" than the Bank of England's 2% target.
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Rishi Sunak may be "boasting" about fulfilling his promise, said James Meadway in The Guardian, but "neither he, nor his government, nor even the Bank of England" deserve the credit, "which is driven by falling global energy prices".
"But, make no mistake," warned the BBC, "prices are still going up", just at a "slower rate than they were".
Here is how the latest drop in the inflation rate may help you.
Your pay packet
Rising inflation means workers’ wages "essentially lose their monetary value", said Unbiased. You are "effectively losing money", said The Times Money Mentor, if your pay doesn’t keep up with the rising cost of living
Separate ONS data this week also showed average earnings, excluding bonuses, were up 7.7% between July and September compared with the previous year, which means wages are now growing faster than living costs.
Savings rates
High inflation is a "big problem" for savers if your interest rate is lower than the cost of living measure, explained MoneyHelper, as it takes a "large chunk out of the purchasing power of their money".
The lower inflation rate means there are now some standard savings accounts that can "outpace its eroding prowess", said Moneyfacts. But savers should "act quickly" as the top "enticing" rates can often be pulled once they become fully subscribed.
Pension payments
The state pension rises each year based on a controversial policy called the triple lock, which uses whichever is higher out of average wages, inflation, or 2.5%.
Pensions are due to increase in April 2024 and the highest of those three figures was the 8.5% the ONS recorded for average wage growth, including bonuses, for May to July 2023. If this is the figure the government uses to work out a rise in state pensions it "probably means pensioners receive an uplift twice the rate of inflation", said the i news site.
Liz Emerson, chief executive of the Intergenerational Foundation, told the site that such a move would be a "massive inter-generational unfairness on the young who will have to work for less money for longer and take less while propping up older people".
Cost of borrowing
Borrowing money such as for a mortgage has become "much more expensive than people were accustomed to for more than a decade", said the BBC, as the Bank of England has been raising interest rates for much of this year to bring inflation down.
Economists are now in "broad agreement", said This is Money, that its hikes are "starting to be felt in the economy", meaning there is less of a need to continue. This could "feed through to a decline in mortgage rates", which have hit highs of 6%.
Your personal inflation rate
The rate of inflation is based on the changing costs of a typical basket of goods including food, clothes, transport and energy bills.
Inflation may be slowing but the figure is just an average and your own costs could be rising at a "very different rate", said the BBC, "depending on what you spend your money on".
For example, food inflation is at 10.1%, "much higher than the average overall rate", so households who spend a greater proportion of their outgoings on food will find their personal inflation rate is "higher than the 4.6% headline figure", the broadcaster added.
Similarly, if you don't drive, said The Times Money Mentor, "you won't be as affected by rises in the cost of petrol compared to the average person".
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