UK inflation stays at 3.8% as food price rises slow for first time since March – as it happened

3.18pm BST Closing summary Our top story: UK inflation was unchanged last month at 3.8%, confounding expectations of a rise, in welcome news for the chancellor, Rachel Reeves, as she plans for her crucial budget next month. The Office for National Statistics (ONS) said that inflation measured on the consumer prices index remained at the same level in September as in August and July. City expectations had pointed to a 4% reading but the ONS said upward pressure from transport prices was offset by cheaper food and a slowdown in inflation for “recreation and culture”, including live music tickets. It was the 12th month in a row CPI remained above the government’s 2% target, however. Related: UK inflation unexpectedly remains at 3.8% for third month in a row Our other main stories: Related: Signs of peak inflation open door to earlier Bank of England interest rate cuts Related: ‘It’s 3p on a pack of sausages’: UK food firms say packaging tax adds to inflation Related: Jaguar Land Rover hack has cost UK economy £1.9bn, experts say Related: Reeves expected to scrap ‘low-value imports’ loophole that benefits Shein and Temu Related: Eurostar to run doubledecker trains through Channel tunnel from 2031 Related: Work to link HS2 to west coast mainline to be delayed for four more years Related: Barclays plays down £20bn exposure to private credit industry Thank you for reading. We’ll be back tomorrow. – JK Updated at 3.18pm BST 3.15pm BST Heathrow's third runway plans to be fast-tracked Heathrow’s third runway plans will be fast-tracked so Britain can “experience the benefits sooner”, the government said, as ministers launched a policy review required for the airport’s expansion. The transport secretary Heidi Alexander said work had started to review the Airports National Policy Statement (ANPS), which sets out the framework for expansion, allowing a final decision by the end of this Parliament to “realise the government’s ambition” of a runway by 2035. She said that new environmental and climate obligations meant an updated ANPS was necessary to allow a decision, but pledged it would be published for consultation by summer 2026, three years quicker than the ANPS arrived when the previous government backed Heathrow. The updated policy statement will include Labour’s four key tests for proposed airport expansion – on climate, noise, air quality, and economic growth – and be consistent with net zero commitments, the government said. Alexander said that Heathrow, as well as the Arora Group, which submitted an alternative proposal, had been asked to provide additional details, with a view to a single scheme being taken forward by November. 3.11pm BST Barclays, housebuilders lead FTSE gains On Wall Street, stocks are broadly flat. The Dow Jones and S&P 500 opened slightly higher while the Nasdaq is down by 19 points, or nearly 0.1%. In London, the FTSE 100 index is 100 points, or 1% ahead at 9,527, with Barclays among the biggest risers, after it upgraded its profitability expectations – despite putting aside another £235m to compensate drivers over the car loan commissions scandal. Housebuilders are also among the main gainers, with Persimmon rising by nearly 5%, Barratt Redrow up 3.6% and Berkeley Group 3.2% ahead. Building materials supplier Howden Joinery is the top riser, up 5.2%, while B&Q owner Kingfisher has gained 3.8%. There has been talk of a housebuilding package from central government for London that will water down affordable housing targets to kickstart stalled development. It is expected in the next few weeks, although some regard it as “Labour’s big housing betrayal”. Related: A leaked memo, a Maga-style hat and a trail of broken pledges – it’s Labour’s great housing betrayal | Aditya Chakrabortty 2.59pm BST Oil rises over 2% on trade talk optimism In financial markets, crude oil is pushing higher for a second day in a row, rising by more than 2%, lifted by hopes of progress on a US trade deal with China and India. Brent crude futures, the global benchmark, rose by 2.1% to $62.64 a barrel while US West Texas Intermediate crude futures climbed by 2.4% to $58.64 a barrel. Donald Trump said he spoke to Indian prime minister Narendra Modi on Tuesday, adding that Modi assured him India would limit its oil purchases from Russia – a thorny issue. India’s Mint newspaper reported today that the two countries are inching closer to a long-stalled trade agreement that would reduce US tariffs on Indian imports to 15%-16%, from 50% at the moment. Turning to China, officials from Washington and Beijing are set to meet this week in Malaysia. Trump said on Monday he expected to hammer out a fair trade deal with Chinese president Xi Jinping, whom he is due to meet in South Korea next week – although on Tuesday he said the meeting might not happen. A summit between the US and Russian presidents has been put on hold. Spot gold fell by 1.6% to $4,051.89 an ounce, reversing a modest gain earlier. On Tuesday, gold tumbled by 5%, its biggest sell-off since 2020 after weeks of record-breaking gains. Updated at 3.23pm BST 2.50pm BST UK energy firms call for regulator Ofgem to be overhauled The UK’s energy companies have called for a radical shake-up of the regulator Ofgem, accusing it of overseeing a rise in domestic bills and slowing Britain’s economic growth. The industry’s trade association, Energy UK, has called for Ofgem to be stripped of some of its responsibilities after overseeing “a dramatic increase in red tape” that it claims has reduced growth and pushed up costs for households. In a report, the trade group noted that despite the government’s plan to reduce the cost of regulation by 25% by the end of this parliament, Ofgem’s headcount had been allowed to increase by 120% over the past 10 years while its budget grew by 200%. By contrast, the energy sector’s workforce had grown by only 8% over the same period. Ofgem is the energy regulator for Great Britain. Related: UK energy firms call for regulator Ofgem to be overhauled 2.49pm BST Work to link HS2 to west coast mainline to be delayed for four more years Work to connect HS2 to the west coast mainline will be deferred for another four years as part of a “reset” of the troubled high-speed rail project. The work between Birmingham and Handsacre in Staffordshire was originally halted in early 2023 by the previous government to limit spending on HS2. The decision to extend the pause means cities in northern parts of the country will have a long wait for even the secondary benefits of HS2, after construction of the planned remaining leg of the railway north of Birmingham was scrapped in 2023. The connection will eventually cut 25 minutes from journeys between London, Liverpool, Manchester and beyond, using new high-speed trains and track as well as the existing mainline. Related: Work to link HS2 to west coast mainline to be delayed for four more years 2.00pm BST Princes Group targets lower than expected £1.24bn float The company behind Princes Tuna, Napolina Pasta and Naked Noodle is targeting a lower-than-expected valuation of up to £1.24bn when it floats on the London stock market. Princes Group reiterated that it hopes to raise £400m, and plans to use the money to fund expansion. The 150-year-old group, owned by Italian food and drinks maker NewPrinces since May last year, said today that it is aiming for a market valuation of £1.16bn to £1.24bn, rather than £1.5bn, in a sluggish UK IPO (initial public offering) market. Related: London stock market boost as beauty group lists and tinned fish brand confirms IPO plan The Liverpool-based company has become one of Europe’s biggest grocery suppliers in recent decades through nearly two dozen acquisitions and mergers. The company plans to sell up to 84.2m new shares priced between 475 and 590 pence, with NewPrinces intending to buy up to £200m worth of shares. Shares in its parent company dropped by 10% on the Milan stock exchange following the announcement. Princes shares are expected to trade on the London Stock Exchange on 5 November 5. Its debut will test investor appetite in the London stock market, which has lost mega deals including Unilever’s ice cream business and fast-fashion retailer Shein and is on track for its lowest number of new flotations this year. Princes joins Texas-based data centre company Fermi’s dual listing - the biggest this year - and alternative lender Shawbrook’s planned float of up to £2bn. Fermi raised more than $680m in early October, giving it a valuation of close to $12.5bn. *This post has been corrected. An earlier version said the expected valuation was £1.14bn, not the actual figure of £1.24bn. Updated at 4.30pm BST 11.58am BST Jaguar Land Rover hack has cost UK economy £1.9bn, experts say The hack of Jaguar Land Rover has cost the British economy an estimated £1.9bn and affected more than 5,000 organisations, a cybersecurity body has said. A report by the Cyber Monitoring Centre (CMC) said losses could be higher if there were unexpected delays to the return to full production at the carmaker to levels before the hack took place in August. “This incident appears to be the most economically damaging cyber event to hit the UK, with the vast majority of the financial impact being due to the loss of manufacturing output at JLR and its suppliers,” the report said. The CMC is an independent non-profit organisation made up of industry specialists including the former head of Britain’s National Cyber Security Centre. Related: Jaguar Land Rover hack has cost UK economy £1.9bn, experts say 11.57am BST Reeves expected to scrap ‘low-value imports’ loophole that benefits Shein and Temu Rachel Reeves, the UK chancellor, is reportedly planning to close a tax loophole in her budget next month that allows overseas retailers including Shein and Temu to send small packages to the UK without paying any customs duties. The arrangement, central to the business model of the online marketplaces where almost all sellers are based in China, has been criticised by British high street chains that complain it creates an uneven playing field. Currently parcels containing goods worth up to £135, known as “low-value imports”, can be imported without incurring any customs duty. By contrast, goods worth over £135 can incur duty of up to 25%. Reeves will use her 26 November budget to close this loophole, which experts say costs the industry as much as £600m a year, according to a Financial Times report quoting unnamed government officials. Related: Reeves expected to scrap ‘low-value imports’ loophole that benefits Shein and Temu 11.30am BST ITV’s share price has dropped sharply to its lowest since April after its biggest investor, Liberty Global, sold half its stake. Shares in the Love Island broadcaster were down by 8% on Wednesday morning, after Liberty on Tuesday said that it would sell 193m shares, worth about £135m. The sale will reduce Liberty’s shareholding from about 10% to approximately 5%. ITV has been the target of repeated takeover rumours, with Liberty seen as a possible suitor after it acquired BSkyB’s 6.4% stake for £481m in 2014. However, the company’s valuation has languished as linear broadcast’s share of advertising has been reduced by competition from online social media video. While that could make it easier to take over, no formal approaches have been made. The share price decline has come despite the success of the ITV Studios arm, which makes hits for ITV and other broadcasters. Those include the reality TV smash Love Island for ITV, the Until I Kill You miniseries that aired in New Zealand, Canada and the UK, and the Jilly Cooper adaptation Rivals for Disney’s streaming service. 10.58am BST Barclays is the top riser on the FTSE 100, after it upgraded its profitability expectations despite putting aside another £235m to compensate drivers over the car loan commissions scandal. The bank’s share price is up by 4.4%, compared with a 0.8% increase on the broader FTSE 100. Russ Mould, investment director at AJ Bell, an investment platform, said: After a slight stumble thanks to concerns over whether a couple of spectacular bankruptcies in the USA mean the credit cycle is turning down, and some turbulence in US banking stocks, shares in Barclays are turning higher again after a strong set of third-quarter results. Management feels confident enough to launch a third share buyback of the year, this time for £500m, to take the total for the year to £2.5bn. That strong signal, and maintenance of targets for return on tangible equity for 2025 and 2026, may help to soothe those who had started to fret as US banking shares took a dive after the high-profile failures of First Brands and Tricolor. Barclays shares are now heading back toward the 17-year high reached last month. 10.37am BST British business lobby to be headed by BAE boss Cressida Hogg The Confederation of British Industry (CBI) has appointed the chair of weapons maker BAE Systems, Cressida Hogg, to be its president. The appointment means that Britain’s biggest business lobby group will have two women leading it, as it continues to try to rebuild its reputation and influence after a scandal in 2023 over governance, bullying and sexual misconduct. The Guardian in 2023 revealed allegations of sexual misconduct and rape by senior men at the organisation. Hogg will take over on 1 January from Rupert Soames, who was appointed in December 2023 in the wake of the scandal. She will act as the lobby group’s figurehead alongside director-general Rain Newton-Smith. As it has rebuilt its reputation, the CBI has taken an increasingly critical stance towards the Labour government. Soames was particularly aggrieved by tax rises at last year’s budget. Hogg was appointed chair of the FTSE 100’s BAE Systems in May 2023, after a career mainly focused on infrastructure investment. She was previously head of infrastructure at the Canada Pension Plan Investment Board from 2014 and 2018, and before that was managing partner of 3i Infrastructure. The CBI said it had considered 50 candidates, via the recruitment firm Egon Zehnder. Hogg said: I am pleased and honoured to have been nominated to be the next president of the CBI. Whilst this is a challenging time for business, it is also one of opportunity. I look forward to working with the CBI team as we help government achieve our common objectives of making the UK a high-growth economy, attracting the investment needed to drive global competitiveness and increased productivity. Updated at 10.47am BST 10.12am BST The surprisingly steady inflation reading may be offering some solace to the chancellor, Rachel Reeves, in Whitehall and the Bank of England governor Andrew Bailey in Threadneedle Street. Isabella Galliers-Pratt, an investment director at Rathbones, an asset manager, said: This morning’s consumer price index release delivered a modest but meaningful reprieve for policymakers and markets alike, defying expectations of a rise to 4.0% and offering a glimmer of stability ahead of the chancellor’s autumn budget on 26 November. She flagged declines in prices in food, recreation, and culture as particularly welcome, “suggesting inflationary fears linked to corporate cost pressures may be easing”. She said: Markets responded positively this morning, with government bond yields edging lower and the FTSE moving higher, offering the chancellor some breathing room given the UK’s substantial proportion of inflation linked debt. Lower inflation expectations help ease borrowing costs, improving fiscal flexibility. This backdrop also provides the Bank of England with greater scope for policy manoeuvre and may prompt speculation around a more dynamic path for the bank rate. 9.44am BST UK house price and rent rises slow Annual house price inflation slowed in August across the UK, while private rent rises also eased, according to official figures. The average price of a home rose by 3% to £273,000 in the 12 months to August, down from 3.2% in July, the Office for National Statistics said. Average house prices increased to £296,000, with an an annual rate of 2.9%, in England, £211,000 (2%) in Wales, and £194,000 (4.0%) in Scotland, in the 12 months to August. The average private rent rose by 5.5% to £1,354 in the 12 months to September, down from 5.7% in August. Average UK house prices up by 3.0%, to £273,000 in the 12 months to August 2025, down from 3.2% in the 12 months to July.Average UK private rents rose by 5.5%, to £1,354 in the 12 months to September 2025, down from 5.7% in the 12 months to August.➡️ https://t.co/mUorDH4by0 pic.twitter.com/tapu6y7175— Office for National Statistics (ONS) (@ONS) October 22, 2025 Average rents increased to £1,410 (5.5%) in England, £815 (7.1%) in Wales, and £1,004 (3.4%) in Scotland, in the 12 months to September. In Northern Ireland, average rents increased to £865 (7.1%), in the 12 months to July. 9.33am BST Signs of peak inflation open door to earlier Bank of England interest rate cuts Has UK inflation peaked? The latest official figures showing price growth in the UK stayed at 3.8% in September seem to suggest so. The statement cannot be made with absolute certainty yet but many economists reacted to the latest consumer prices index (CPI) data with a message that the only direction for inflation over the rest of the year was down. City economists had expected the Office for National Statistics to report an increase from August’s 3.8% to 4%, and they were in good company – the Bank of England also said inflation would top out at that level last month. Food retailers had other ideas. They slowed the recent escalation in the cost of essential items, helping to ease the pressure on household budgets. Related: Signs of peak inflation open door to earlier Bank of England interest rate cuts 9.09am BST Lidl GB, the UK arm of the German discount supermarket chain, believes there is still the opportunity to open hundreds more stores in Britain, its boss said this morning. Chief executive Ryan McDonnell told Reuters after Lidl GB published annual results. We still see the opportunity for hundreds more stores. He declined to put a ceiling on Lidl GB’s store ambitions. The discounter opened 12 new stores in the year to 28 February, and intends to open 40 in the current year. Next month it will open its 1,000th store. Rival German-owned discounter Aldi has a target of 1,500 UK stores. 8.29am BST Barclays posts dip in profits as it ups car finance compensation pot Barclays has reported a dip in profits, as it became the latest high street bank to put aside hundreds of millions of pounds to compensate drivers over the car loan commissions scandal. The UK lender announced it was setting aside a further £235m, after the Financial Conduct Authority earlier this month proposed a £11bn redress programme. The scheme, which is currently out for consultation, could end up compensating millions of customers over 14m historic car loan contracts, if they are deemed unfair because of controversial commission arrangements with car dealers It takes Barclays’ total compensation pot to £325m, having first put aside £90m in February. Barclays no longer provides car finance but is dealing with the fallout for the remaining loans on its books. Last week, its high street rival Lloyds Banking Group said it was putting aside an extra £800m to deal with potential compensation, bringing its total provision to almost £2bn. Lloyds is the UK’s biggest car lender through its Black Horse division, and is due to report its third quarter results on Thursday. The new provision weighed on Barclays’ earnings, having reported a 7% drop in pre-tax profits to £2.08bn in the three months to the end of September, down from £2.2bn during the same period last year. That was compared to consensus estimates for £2.1bn. However, that did not stop the bank from announcing fresh payouts for investors. Barclays chief executive CS Venkatakrishnan said he was launching another £500m worth of share buybacks, and would be moving to quarterly payouts for shareholders – rather than waiting for half-year and end-of-year earnings to do so. “I continue to be pleased with the ongoing momentum of Barclays’ financial performance over the last seven quarters,” Venkatakrishnan said, adding that he was upgrading the profitability guidance – under a measure known as return on tangible equity – for the full-year. Updated at 10.59am BST 8.25am BST Eurostar to run doubledecker trains through Channel tunnel from 2031 Eurostar is to start running doubledecker trains through the Channel tunnel to meet growing demand for international rail travel from the UK – but not until 2031. The rail operator announced it had signed a €2bn (£1.7bn) deal for at least 30 – and up to 50 – new trains from the manufacturer Alstom. The doubledeckers will start operating from 2031, with each able to carry more than 1,000 passengers. Eurostar said the Celestia trains, the first high-speed doubledeckers to run on the UK mainland, would have about 20% more seats than its biggest existing trains. Some of the extra space would be taken up by stairs, but it would also be used for wheelchairs, bicycles, additional legroom and “surprises”, it said. The SNCF-owned operator plans to maintain the entire fleet at the Temple Mills depot in north-east London, which it hopes to redevelop with a further €80m investment, creating 350 jobs. Related: Eurostar to run doubledecker trains through Channel tunnel from 2031 Updated at 8.26am BST 8.23am BST Reeves says economic damage caused by Brexit forcing her to take action in budget Rachel Reeves has blamed a heavier than anticipated blow from Brexit and austerity for forcing her to take action to balance the books at next month’s budget. In her clearest attempt to draw Brexit into the framing of her imminent tax and spending decisions, the chancellor said leaving the EU was turning out to have caused more damage than official forecasters had previously outlined. The chancellor hinted she was braced for a sharp downgrade in growth forecasts from the Treasury’s independent watchdog, the Office for Budget Responsibility (OBR), alongside what is shaping up to be a crucial budget. She said at an investment event in Birmingham on Tuesday” The OBR, I think, are going to be pretty frank about this – that things like austerity, the cuts to capital spending and Brexit have had a bigger impact on our economy than was even projected back then. That is why we are unashamedly rebuilding our relations with the EU to reduce some of those costs, that in my view were needlessly added to businesses since 2016 and since we formally left a few years ago. The chancellor’s intervention comes amid growing confidence within Keir Starmer’s government to speak out about the damage of Brexit, as the decision to leave the EU almost a decade ago continues to weigh heavily on Britain’s economic performance. Related: Reeves says economic damage caused by Brexit forcing her to take action in budget 8.21am BST Real living wage to rise by almost 7% in boost for low-paid UK workers In other good news… Almost half a million workers are to receive a pay boost after it was announced that the real living wage paid voluntarily by 16,000 UK companies will rise to £13.45 an hour in April. Distinct from the national living wage, which is a statutory minimum, the real living wage is calculated each year based on the cost of essentials, and is paid by more than half of the companies in the FTSE 100. Born from a long-running campaign about the difficulties of making ends meet on poverty pay, employers can agree to pay the more generous rate. The Japanese clothing store Uniqlo, the University of Salford and Truro city council are among the latest to sign up. The real living wage will rise to £13.45 an hour nationwide from April – an increase of 85p an hour, or 6.7%. In London, it will go up 95p, or 6.9%, to £14.80 an hour. Related: Real living wage to rise by almost 7% in boost for low-paid UK workers 8.14am BST Lidl profit triples as it expands, hiring 3,000 new staff German discounter Lidl said it gained “record momentum” in Britain over the past year as its low prices attracted more customers to its stores at a time of high food price inflation and tight household budgets. The discount grocer’s pre-tax profit more than tripled in the year to the end of February, climbing to £156.8m from £43.6m a year earlier, while its revenue rose by nearly 8% to £11.7bn. It comes as Lidl is preparing to open its 1,000th British store next month and is continuing its expansion plans, with 13 new locations expected to open before Christmas. Its new store openings saw it hire 3,000 new staff in the year to the end of February. The discounter’s continued expansion plans have seen it come close to overtaking Morrisons to become the UK’s fifth largest grocer, with a current market share of 8.2% (compared to Morrison’s 8.3%) according to the most recent grocery market share data from Worldpanel by Numerator. As a result, Lidl is calling itself the “fastest-growing bricks-and-mortar grocer” and says it has held this position for over two years. The retailer said it had experienced over £400m in direct switching from its rivals, citing Worldpanel figures from February, combined with almost £500m in growth from customer loyalty, which led to an almost £900m increase in turnover. Ryan McDonnell, chief executive of Lidl GB, said: More households are choosing to shop with us more often, because we continue to deliver on our promise of outstanding quality at the lowest possible prices. Lidl said it had also upgraded some of its existing stores over the past six months, allowing it to increase its fresh produce and bakery offering, while it said its app was helping to drive footfall to its shops. 8.09am BST The downside surprises were widespread across core goods and services, Wood said. Core goods inflation ticked down to an annual rate of 1.5% from 1.6% in August, despite the erratic games, toys and hobbies category jumping, likely driven by volatile computer games. Services inflation stayed at an annual rate of 4.7%. Wood has crunched the numbers. Clothes price inflation accelerated largely as we expected, matching the strong BRC Shop Price Index for that component, but new car prices fell 0.3% month-to-month, down from 0.1% in August and the weakest since February. Used car prices were unsurprising, rising 0.3% month-to-month. Furniture and other goods also surprised us modestly on the downside. Six of the nine high-level services sub-components we have in our table surprised us to the downside, with volatile car insurance one of the minority with an upside surprise. Accommodation services also surprised us, rising 3.2% month-to-month, up from -2.2% in August and above our call of 2.7%. Still, broadly we expected a strong month for hotel months, which had been signalled by our tracker. A large drop was always likely as airfares unwound the unusually large seasonal rise between August and September. Airfares still boosted inflation 10bp compared to August, just 1bp less than we assumed, because prices fell even faster in September 2024. Private school fees rose 4.4% month-to-month, strong given how much headline inflation has slowed from the peaks that helped support this component, but weaker than we’d expected given the possibility that schools would still be passing through the VAT hike on fees implemented in January. Elsewhere, catering services inflation ticked up to 4.3% from 4.2% in August but undershot our call, rent inflation slowed 0.1pp to 4.3%, again surprising our call, communication inflation dropped 140bp, much weaker than we assumed. Within other services inflation in our table, recreation and cultural services were much weaker than expected, falling 0.3% month-to-month. We’ll get into the details but suspect live music explains that. Again partly erratic, but part of a widespread set of downside news today. Cutting through the noise, rate setters’ measure of underlying services inflation—excluding indexed and volatile components, rents and foreign holidays—fell to 3.9% in September from 4.3% in August, the weakest since February 2022. Monica George Michail, associate economist at National Institute of Economic and Social Research, a respected think tank, expects the Bank of England to pause rates until at least February. @JuliaKollewe https://t.co/l9eszCtNGn— National Institute of Economic and Social Research (@NIESRorg) October 22, 2025 7.58am BST Rob Wood, chief UK economist at Pantheon Macroeconomics, said widespread downside surprises across the inflation components raise the chances of an interest rate cut in December. September was likely the peak in this inflation hump, and it came in 20bp weaker than the monetary policy committee [MPC] and we expected. 3.8% inflation is still uncomfortable territory for the MPC, nearly double their target, and we expect the path down to 2% to be protracted. Some caveats mean we need to be cautious with this release. CPI was collected late, on September 16, compared to the September 9 date we and we think the market expected, which will have weighed on air fares and hotel prices. Underlying services inflation remains close to 4% and surveys suggest it will stay there at least until the spring. Erratic movements in some components, and a surprise in rents that the MPC look through, explain some of the downside. But those caveats fail to over-ride the dovish news completely. So the five doves on the committee will likely take heart. A rate cut by December looks likely now. We still think the MPC will skip November—the growth data and stabilising jobs suggest they can afford to wait still—and the 26 November budget also seems forth waiting for, as well as another round of inflation data. We’ll chew over the data in detail today, but our initial reaction is that we will likely bring forward our rate cut call from February to December. We’re not throwing in the towel on our structural hawkish views, as we say we think the path down for inflation will be protracted. But the doves on the MPC will want to lower rates if they can. Updated at 7.59am BST 7.38am BST Financial markets are betting that the next interest rate cut will come sooner than previously thought. Another reduction is now fully priced in by February, compared with March before the inflation figures, according to interest rate futures. Markets also expect more easing next year than previously, pricing in 64 basis points of Bank of England rate cuts versus 57 bps before the inflation data was released. Updated at 7.40am BST 7.30am BST Some economists are saying this is probably the peak in inflation. What does this mean for interest rates? Paul Dales, chief UK economist at Capital Economics, said: CPI inflation was lower than feared in September, as it stayed at 3.8% rather than rising to 4.0% or above. We doubt this will prompt the Bank of England to cut interest rates from 4% in November. But it increases the chances of the next cut happening by February in line with our forecast and it supports our view that interest rates will be reduced to 3% next year. What’s more, this will probably be the peak in inflation. Our forecast is for CPI inflation to fall to 3.5% or below in October, not least due to the declines in utility and fuel prices that we already know about. Food price inflation may yet rise further, perhaps back above 5.0% by December, but there are… good reasons to expect it to fall back next year. And if we’re right in thinking that weak employment will significantly weigh on wage growth next year, then CPI inflation may surprise most people by falling to 2.0% by the end of next year. Turning to the budget, Dales said: It’s possible the chancellor will add to that trend in the budget on 26 November, either by reducing inflation directly (cutting VAT on utilities from 5% to 0% would trim CPI inflation by 0.2ppts) or indirectly as higher taxes chip away at economic activity. 7.18am BST Petrol prices and airfares fell last month, but not as much as a year earlier. The average price of petrol fell by 0.2p a litre between August and September to an average of 134p a litre in September, but last year prices fell by 5.5p a litre. Diesel prices were down by 0.4p a litre to 141.8p a litre. Air fares fell by 28.8% between August and September, the third-largest September decrease since the collection of airfares changed from quarterly to monthly in 2001. However, air fares fell by 34.8% a year earlier, which was the largest September drop since 2001. This meant annual transport inflation rose to 3.8% from 2.4%. This was offset by lower prices for leisure activities, in particular live music concerts, where monthly prices fell by 8.6% compared with a rise of 5.8% a year earlier. Overall, the annual inflation rate in recreation and culture fell to 2.7% from 3.2%. Here’s our full story: Related: UK inflation unexpectedly remains at 3.8% for third month in a row Updated at 8.17am BST 7.10am BST Introduction: UK inflation stays at 3.8% as food price rises slow for first time since March Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. UK inflation was unchanged last month, defying expectations of a rise to 4%, with food price rises finally slowing. The annual rate of inflation, as measured by the consumer prices index (CPI), was 3.8%, the same as August’s reading, according to Office for National Statistics data. Inflation is still almost double the Bank of England’s 2% target, and has been above it for 12 months in a row. The core rate of inflation, which strips out volatile food and energy costs, dipped to 3.5% from 3.6% in August. This is good news for the chancellor, Rachel Reeves. She said last week she would announce “a range of policies” in her 26 November budget to “bear down on some of the costs that people face”. Importantly, food prices dipped by 0.2% in September from August amid discounting at supermarkets, taking the annual growth rate to 4.5%, from 5.1% in August. It was the first time since May last year that food prices have fallen on the month; and the first time since March this year that the annual rate has slowed. The Consumer Prices Index (CPI) rose by 3.8% in the 12 months to September 2025, unchanged from August 2025.The September, August and July 2025 figures were the joint-highest recorded since January 2024, when the rate was 4.0%.Read the article ➡️ https://t.co/MkZBeF7kCc pic.twitter.com/sQ6mUCGB11— Office for National Statistics (ONS) (@ONS) October 22, 2025 Commenting on today’s inflation figures for September 2025, ONS Chief Economist Grant Fitzner said: (quote 1 of 2) 💬 pic.twitter.com/vE9BMufbUW— Office for National Statistics (ONS) (@ONS) October 22, 2025 Grant Fitzner went on to say: (quote 2 of 2) 💬 pic.twitter.com/qalpmPHqa4— Office for National Statistics (ONS) (@ONS) October 22, 2025 Gold rose by 0.5% at $4,145 an ounce this morning after its biggest one-day fall in five years. The precious metal tumbled more than 5% on Tuesday, as a record-breaking rally in recent weeks reversed at the end of the Diwali gold buying season. Gold fell as low as $4,003.39 an ounce. Alex Hill, managing director at Electus Financial in Auckland, told Reuters: What goes up has to go down. You’ve had a market that’s gone parabolically higher, at some points it’s going to get some relief. Citi analysts wrote in a research note: Gold had run ahead of the ‘debasement’ story. We had flagged that prices were stretched to levels previously associated with pullbacks and had reduced our long position accordingly. Related: ‘The debasement trade’: is this what’s driving gold, bitcoin and shares to record highs? The Agenda 9.30am BST: UK house prices Noon BST: US MBA Mortgage applications 1.25pm BST: ECB president Christine Lagarde speech 3.30pm BST: US EIA Crude oil stocks change 7pm BST: Annual City banquet at Mansion House and speeches Updated at 7.31am BST