inflation at 1.7% in September, its lowest level in three years

British inflation reached its lowest level in three years in September, at 1.7%, according to the Office for National Statistics (ONS), a level below expectations and the Bank of England’s 2% target. England, which could encourage it to lower its interest rates by the end of the year. “Lower prices for airline tickets and oil were the main drivers of this month’s fall”explains Grant Fitzner, economist at the ONS. Inflation remained at 2.2% year-on-year in August.

It is absolutely astonishing to see such a dramatic decline,” comments Naeem Aslam, analyst at Zaye Capital. “The Bank of England must now seize this opportunity and return interest rates to their normal levels”he adds, estimating that it could even consider a reduction of 0.75%. The Governor of the Bank of England, Andrew Bailey, said he was considering a rate cut in early October “a little more aggressive” at its next meetings in November and December if the slowdown in inflation is confirmed.

The central bank already reduced its rates at the beginning of August for the first time since 2020, to 5% against 5.25% previously, but then said it wanted to continue monetary loosening with caution, leaving its rate unchanged in September.