Inflation falls below 2% target for first time in three years

UK inflation has decreased to below the 2 per cent target for the first time in over three years.

The consumer price index (CPI) has dropped to 1.7 per cent, down from 2.2. per cent in August, according to the Office for National Statistics.

The figure has beaten expert predictions, which largely estimated a more modest drop to 1.9 per cent.

It’s expected the drop will empower policymakers at the Bank of England to slightly cut interest rates in November to 4.75 per cent.

The Bank’s governor John Bailey had previously indicated a desire to bring interest down, saying earlier this month that rate cuts could become “more aggressive” if needed.

David Murray, financial planning expert at abrdn said: “All signs were pointing to a decline in inflation in September, so to see rates continue a downward trend to 1.7 per cent – the first time inflation has been below the Government’s 2 per cent target in more than three years – will be a huge relief.

“This will leave many hoping for a cut to interest rates next month, meaning we’d see two cuts before the end of the year, with some even suggesting that the base rate will be brought down to 4.5 per cent.”

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