The Canary Wharf business district is seen in the distance behind autumn leaves on October 09, 2024 in London, United Kingdom.
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LONDON – Inflation in the United Kingdom fell sharply to 1.7% in September, the Office for National Statistics said on Wednesday.
Economists polled by Reuters had expected the key interest rate to come in at a higher 1.9% for the month, marking the publication's first fall below the Bank of England's 2% target since April 2021.
Inflation has been at this level over the past four months, reaching 2.2% in August.
Core inflation, which excludes energy, food, alcohol and tobacco, was 3.2% in the month, down from 3.6% in August and below a Reuters poll forecast of 3.4%.
Price growth in the services sector, the dominant part of the UK economy, fell sharply from 5.6% in August to 4.9% last month, now at its lowest level since May 2022.
Core and services inflation are key points of observation for Bank of England policymakers as they consider whether to cut interest rates again at their November meeting.
On Wednesday morning, market prices were estimating an 80 percent chance of a rate cut in November, ahead of the latest inflation numbers. Analysts said on Tuesday that lower wage growth reported by the ONS this week had bolstered the case for a cut. The BOE cut its key interest rate by 25 basis points in August before maintaining it in September.
Within the broader European region, inflation in the euro zone fell below the European Central Bank's 2 percent target last month, reaching 1.8 percent, the latest data showed.
This is a breaking news story and will be updated shortly.
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