UK consumer price inflation fell to 2.8% in October, the Office for National Statistics reported on 20 November. That is the lowest reading since February 2024 and brings headline CPI to within striking distance of the Bank of England's 2% target.
What drove the fall
Energy prices were the primary driver. The energy component fell 4.1% year-on-year, subtracting roughly 0.3 percentage points from headline inflation. This reflects the combination of lower global gas prices and a favourable base effect: energy was expensive in October 2025, making year-on-year comparisons flattering in October 2026. The Ofgem energy price cap — which sets the maximum unit price suppliers can charge domestic consumers — was also lower in October 2026 than a year earlier.
Services inflation, which the Bank of England watches most closely as a gauge of domestic price pressure, eased to 5.0% from 5.2% in September. While still elevated relative to the 2% target, the direction is encouraging. The ONS CPI bulletin noted particular easing in restaurants and hotels, and in recreation and culture.
Core CPI and the Bank of England
Core CPI (all items less energy, food, alcohol and tobacco) fell to 2.6%, down from 2.7% in September. This is the measure most closely tracked by Bank of England's Monetary Policy Committee alongside services CPI and wage growth when setting the Bank Rate. The MPC next meets on 11 December; markets are pricing an 80% probability of a 25 basis-point cut following October's data. The November Monetary Policy Report published alongside the November decision will set out the MPC's updated inflation projections.