UK inflation remains steady at 3.8%, above the Bank of England’s 2% target. Markets react positively as figures are lower than expected, with the FTSE 100 rising 0.5% at open. Transport costs are a major contributor to inflation, with airfares falling but not enough to offset overall increases. The Bank of England is unlikely to cut rates at its upcoming November meeting.

Even with stable inflation figures, UK households are feeling financial pressure. Competitive savings account rates struggle to keep pace with rising prices. Transport costs, including motor fuels and airfares, play a significant role in driving inflation. Despite some positive market response, households are still under financial strain.

While inflation is elevated at 3.8%, it is unlikely to prompt a rate cut by the Bank of England in November. Observers believe the lower figure will not sway the Monetary Policy Committee’s decision. Some predict a rate cut in early 2026 due to cooling inflation and weaker price pressures. The Bank may wait for more decisive drops in inflation before considering rate cuts.

Read more at Morningstar.

UK inflation remains steady at 3.8%, above Bank of England’s 2% target. Markets react positively as figures come in lower than expected. Bank of England unlikely to cut rates at November meeting.: UK Inflation Unexpectedly Holds Steady at 3.8% in September