UK inflation falls below 2% for first time since 2021 in boost to Rachel Reeves

Surprise annual drop to 1.7% in September raises chance of interest rate cuts, increasing budget leeway

• UK inflation surprise opens up wriggle room for lower rates and less painful budget
• Surprise fall in UK inflation badly timed for benefit recipients

Inflation in the UK has fallen to its lowest level in three and a half years, giving a pre-budget boost to Rachel Reeves as expectations grow for the Bank of England to cut interest rates.

Figures from the Office for National Statistics show the consumer prices index dropped sharply to 1.7%, down from 2.2% in August, in a bigger fall than anticipated in financial markets, driven by lower air fares and petrol prices.