UK September Inflation Eases to 3.8%, Below Forecast — BoE Rate Cut Expected in December

The United Kingdom’s consumer price index (CPI) rose 3.8% year‑on‑year in September, slightly below market expectations of 4%, reinforcing speculation that the Bank of England (BoE) may begin cutting interest rates as early as December.

According to the Office for National Statistics (ONS), lower energy costs and easing food inflation were the main drivers behind the softer reading. Core inflation, which excludes volatile food and fuel prices, also slowed for the third consecutive month, signaling continued disinflation across sectors.

Economists note that cooling prices, combined with weak retail spending and a sluggish housing market, are heightening pressure on the BoE to shift toward more accommodative policy. The central bank has kept its benchmark rate at 5.25%, the highest level since 2008.

Market expectations of a December rate cut have now risen to over 70%, according to futures pricing. A more dovish BoE stance could provide near‑term relief for households and businesses, though officials are likely to emphasize data dependence before making any policy move.