Inflation has dropped to 3.6 per cent, offering households a small break from the cost of living crisis as price rises continue to cool.

The latest consumer prices index (CPI) figures were released this morning, down from 3.8 per cent in September.

The slight fall will come as rare good news for Chancellor Rachel Reeves just one week before she delivers her Budget on November 26.

Economists had widely predicted today’s result after months of signals that inflation had “peaked”, and most expect the rate to keep easing gradually into next year.

The MPC does not expect inflation to fall to its two per cent target level until 2027.

Despite today’s drop, inflation still sits well above the Bank of England’s two per cent target, meaning interest rates are expected to stay high for now. The Bank held rates at four per cent earlier this month, saying it needed stronger evidence that inflation was “fully under control”.

Personal finance experts say that while the pressure on prices is easing, it remains a crucial moment for households to take stock of their finances.

Borrowing costs are not expected to fall any time soon, making it important for people to ensure they are on competitive savings, mortgage and loan deals.

Kevin Mountford, personal finance expert and co-founder of Raisin UK, said the numbers highlight the need for families to focus on financial resilience rather than short-term wins.

He said: “With price pressures easing only gradually, borrowing costs are set to remain high. This makes it an important time for consumers to review their financial position, ensure they’re on competitive savings accounts, mortgage or loan deals, and make the most of savings opportunities before rates begin to shift.”

New data from Raisin UK also shows how strained household budgets continue to be. According to its latest Great British Savings Report, four million people have dipped into their savings to pay off debt, while three million have been forced to use savings to cover healthcare costs.

UK inflation dips for first time in months but remains well above Bank of England target.

Mr Mountford urged savers to take advantage of today’s high rates while they are still available.

He added: “One way to do this is by reviewing existing accounts and securing strong interest rates while they are still available. Taking proactive steps today can help protect savings while inflation remains stubbornly high.”

The BoE itself expected inflation to hit 3.6 per cent.

In a note sent over the weekend, Deutsche Bank’s chief UK economist Sanjay Raja said: “After a downside surprise in September, we think inflation will likely step down to start the fourth quarter of 2025.”

But he added there were still some factors that could put upward pressure on the number.

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