Rishi Sunak received a much-needed boost as inflation fell to 4.6 per cent, meaning his pledge to halve the rate at which prices are rising has been met.
The inflation rate when Mr Sunak made it the first of his five priorities was over 10 per cent, meaning he was hoping for a it to drop below 5 per cent.
Wednesday’s figure marked a dip from 6.7 per cent last month. The bigger than expected fall gives Mr Sunak and chancellor Jeremy Hunt more flexibility ahead of next week’s autumn statement and will fuel calls for tax cuts from the Tory right.
Mr Hunt said the government is “beginning to win the battle against inflation” but “there’s lots more work to do”.
And he said meeting the promise of halving inflation would allow the Government to “move to the next part of our economic plan”, focused on growth.
He told broadcasters: “There’s lots more work to do. We still have to bring inflation down to its target level of 2 per cent.
“But now we are beginning to win the battle against inflation, we can move to the next part of our economic plan, which is the long-term growth of the British economy.
“That’s why next week will be an autumn statement for growth.”
And, after a torrid week for Mr Sunak, he celebrated having delivered on his pledge to halve inflation.
The prime minister said: “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.” The prime minister’s four other pledges – growing the economy, reducing national debt, cutting NHS waiting lists and stopping small boat channel crossings – look in doubt.
But Mr Sunak said cutting inflation was his top priority because it “works like a tax… eating into the pound in your pocket”.
And he added that getting it down “involved hard decisions and fiscal discipline”
“But 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 per cent,” he said.
The Institute of Chartered Accountants in England and Wales (ICAEW) said the fall in inflation was “little to do with government action”.
Economics director Suren Thiru said: “While the prime minister has achieved his target to halve inflation this year, this owes more to the downward pressure on prices from falling energy costs and rising interest rates than any government action.”
And Labour immediately attacked the government for what it called “thirteen years of economic failure”, noting that prices are still rising at more than double the Bank of England’s target 2 per cent rate.
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 thirteen 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.”
The latest dip in inflation marks a boost for borrowers, increasing the likelihood of the Bank of England holding interest rates at 5.25 per cent.
The central bank pushed through 14 consecutive rate hikes to bring inflation under control, driving up the cost of mortgages and other loans. But after inflation fell in September, the Bank held interest rates steady for the first time.
The figures come on a crucial day for the PM, with the High Court set to rule on whether the government’s Rwanda asylum policy is lawful.
The flagship immigration scheme is the cornerstone of another of Mr Sunak’s pledges, to stop small boats crossing the channel.
The much needed boost also comes after Mr Sunak was branded a failure by his former home secretary Suella Braverman, who he sacked on Monday.
In an incendiary letter, Ms Braverman told the prime minister he had “manifestly and repeatedly failed to deliver” on key policies.
She also accused him of leaving the country in an “impossible position” with no “credible Plan B” just hours before a crunch court ruling on his flagship Rwanda plan.
And she hit out at Mr Sunak for what she said was a “betrayal” of his pledge to do “whatever it takes” to stop migrants arriving on boats in return for her support during the Tory leadership contest.
Wednesday’s 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.
