Inflation falls to 3.6%: Are we finally turning a corner?

Good news for shoppers - the rate of inflation is finally coming down.

According to the Office for National Statistics (ONS), inflation fell to 3.6% in October.

That’s down from 3.8% in September and the first time in seven months that inflation has fallen.

And although it’s still above the Bank of England’s target of 2%, it does suggest that the rate of price increases may have peaked and that we’re finally starting to turn a corner.

Responding to the figures, chancellor Rachel Reeves said: “This fall in inflation is good news for households and businesses across the country.

“But I’m determined to do more to bring prices down.

“That’s why at the Budget next week, I will take the fair choices to deliver on the public’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”

What's behind the fall?

The drop in inflation was largely down to a welcome slowdown in energy price rises.

But many shoppers might not feel the benefit just yet, as food prices rose by 4.9% in the year to October.

What is inflation?

Inflation is a measure of how fast prices are going up.

So if inflation is high, your money doesn’t stretch as far when you’re buying goods and services.

But although a fall in inflation is, on the face of it, good news, it doesn’t mean that prices are coming down.

It just means they aren’t increasing quite as fast.

How is inflation linked to interest rates?

The Bank of England can change interest rates to bring inflation under control.

Raising rates can nudge people and businesses to save more and spend less, which, over time, can help slow price rises.

And if inflation is too low, the Bank may cut interest rates to make borrowing cheaper, encourage spending and drive economic growth.

How high are interest rates at the moment?

Earlier this month, the Bank of England kept interest rates on hold at 4%.

Since August last year, the Bank of England (BoE) has cut interest rates five times.

The Bank’s Monetary Policy Committee has been taking a more cautious approach in the last few months as the economic picture remains mixed.

But these latest inflation figures have raised hopes that rates could be cut again before Christmas.

How is inflation measured?

Imagine a shopping basket full of everyday items like bread and milk, along with bigger purchases like cars and televisions.

The ONS tracks the price of what’s in that basket every month - and the headline inflation figure shows how much it’s changed.

How to manage rising costs

If you’re struggling to keep up with your day-to-day-expenses, there are practical steps you can take.

Look at your spending

It’s important to know how much money is coming in and exactly where it’s going.

You can then prioritise your spending and see where you can make savings.

Check out our guide to how to create a budget to get started, and give our budget planner a try - it’s free and easy to use.

Check your benefits

You might be eligible for financial support from the government.

Use our benefits calculator to see what help you could be entitled to claim.

Tackle problem debts

If you’re struggling with debt, get in touch for confidential, practical and impartial debt advice.