Chances of November interest rate cut jump, and pound falls, as UK inflation drops to 1.7% – as it happened

UK inflation drops below 2% target in September, weakening pound, and likely meaning a small increase in state benefits next year

• UK inflation falls below 2% for first time since 2021 in boost to Rachel Reeves
• Sharp inflation drop gives green light to more aggressive Bank of England rate cuts

Today's report shows that prices in the UK are rising a little slower than in Germany (where inflation was 1.8% on an EU-harmonised basis), but faster than in France (where harmonised CPI was just 1.5%).

With inflation firmly below the Bank of England's 2% target, policymakers could potentially cut interest rates at their final two meetings of 2024.

For the first time in more than three years inflation is back below the Bank of England's 2% target. With inflation falling below this level and the pace of wage growth slowing, the conditions appear ripe for another rate cut at the Bank of England's next decision in early November, and maybe even the one after in December too.

This will please the government in the run up to the hotly anticipated budget, where we are being repeatedly told tough decisions are to be announced, so any sliver of good economic news will likely be pounced upon.