Rishi Sunak has indicated that further “hard decisions” on the economy and public finances would be needed despite claiming success in meeting his pledge to halve inflation.
Consumer Prices Index inflation was 4.6% in October, down from 6.7% in September, according to data from the Office for National Statistics (ONS).
The Prime Minister made halving inflation his top priority for 2023 in a major speech in January, when the rate was 10.7%.
The decline in the rate at which prices are increasing will add to Tory pressure on Mr Sunak and Jeremy Hunt to cut taxes, something the Chancellor has resisted because of concerns it could push inflation back up.
In January I made halving inflation this year my top priority.
I did that because it is, without a doubt, the best way to ease the cost of living and give families financial security.
Today, we have delivered on that pledge. pic.twitter.com/qcfuLeLiXe
— Rishi Sunak (@RishiSunak) November 15, 2023
In a sign that Mr Hunt’s autumn statement next week will not result in a dramatic change of course, Mr Sunak stressed the need to continue to bear down on inflation to get it to the Bank of England’s 2% target.
Mr Sunak said: “Inflation works like a tax. It eats into the pound in your pocket, affecting the price of your food shop, your mortgage, the size of your pension pot.
“This is why halving inflation has been my number one priority.
“Getting it down has involved hard decisions and fiscal discipline.”
He added: “While it is welcome news that prices are no longer rising as quickly, we know many people are continuing to struggle, which is why we must stay the course to continue to get inflation all the way back down to 2%.”
Mr Hunt said the fall in the rate of inflation was “thanks to deliberate action we’ve taken – being disciplined on spending, helping people into work and resisting calls for additional borrowing”.
A main driver of the drop in the inflation rate is due to shifts in energy prices rather that Government restraint with the public finances.
Tory former cabinet minister Sir John Redwood said tax cuts were needed to boost the Conservatives’ chances at the next general election.
“The autumn statement needs to cut taxes, promote growth and get value for public spending to turn things round,” he said.
Labour said Mr Sunak meeting his pledge of getting inflation down below around 5.3% was an example of the Prime Minister marking his own homework and the real test was the Bank’s 2% target.
Shadow chancellor Rachel Reeves said: “The fall in inflation will come as some relief for families struggling with the cost of living.
“But now is not the time for Conservative ministers to be popping champagne corks and patting themselves on the back.
“After 13 years of economic failure under the Conservatives, working people are worse off with higher mortgage bills, prices still rising in the shops and inflation twice as high as the Bank of England’s target.”
Liberal Democrat Treasury spokeswoman Sarah Olney said: “Rishi Sunak congratulating himself over today’s figures will be cold comfort for all the hard-working people still bearing the brunt of this Conservative chaos.”
The slowdown in inflation came after energy prices soared last year.
Energy bills were capped at £2,500 last year for the typical household, but this year, industry regulator Ofgem has capped bills at £1,834 for the typical household as prices have fallen.
Slowing inflation was also driven by house prices, which saw the lowest CPI rate since records began in 1950.