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UK inflation unexpectedly remains at 3.8% for third month in a row

about 12 hours ago
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UK inflation was unchanged last month at 3,8%, confounding expectations of a rise, in welcome news for the chancellor, Rachel Reeves, as she plans for her crucial budget next month,The Office for National Statistics said that inflation measured on the consumer prices index remained at the same level in September as in August and July,City expectations had pointed to a 4% reading but the ONS said upward pressure from transport prices was offset by slightly cheaper food and a slowdown in inflation for “recreation and culture”, including live music tickets,The September reading raised hopes that the Bank of England could cut interest rates sooner than previously expected, with markets moving their bets for the first full quarter-point reduction from March to February next year.

Rising food prices, driven partly by climate-related factors, have been causing mounting concern.Policymakers are likely to welcome the fact that food prices declined 0.2%, compared with August, the first monthly fall since May last year.Annual food price inflation eased to 4.5%, from 5.

1% in August, the first time it has slowed since March,The ONS said another source of downward pressure on inflation came from the “recreation and culture” sector, which includes trips to the theatre and cinema,Prices here were flat month on month, with the ONS pointing in particular to live music, where prices were down 8,6%, compared with August,These weaker areas offset higher prices from transport, in particular petrol and air fares.

Transport costs were up 3.8% year on year, the ONS said, higher than the 2.4% annual rate in August.While September’s inflation rate of 3.8% was lower than expected, it remained well above the government’s 2% target, the 12th successive month that CPI has surpassed that level.

Reeves said: “I am not satisfied with these numbers.For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out.That needs to change.All of us in government are responsible for supporting the Bank of England in bringing inflation down.”Reeves said last week she would announce a “range of policies” in her 26 November budget to “bear down” on some of the costs that people faced.

The Bank of England has pointed to the importance of “administered” prices, such as energy bills and transport fares, in driving up consumer costs.The chancellor is expected to meet cabinet ministers on Thursday to ask what each department can do to help tackle rapid cost increases.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe International Monetary Fund forecast last week that UK households would experience the highest inflation rate in the G7 this year and next.September’s CPI rate is used for uprating a range of benefits, including universal credit, disability payments and the state pension.However, under the “triple lock” promise, next year’s state pension rise will be dictated by the higher 4.

8% reading for annual wage growth excluding bonuses in the three months to the end of July.Duties on alcohol and tobacco, and the price of train tickets, traditionally increase in line with September’s reading of the retail prices index, a separate measure of inflation superseded for most other purposes.The ONS said RPI inflation in September was 4.5%.No decision on uprating will be made until the budget, however, and Reeves could choose to implement lower rises as an inflation-fighting measure.

Policymakers on the Bank’s nine-member monetary policy committee have been concerned about the unexpected persistence of inflation.No reduction is expected at its 6 November meeting, shortly before Reeves’s budget, but the final meeting of 2025 is on 18 December.Thomas Pugh, an economist at the consultancy RSM, said: “Inflation will probably trend down only gradually from here, so we doubt this will be enough to tempt the Bank of England into cutting interest rates next month.But it does put a December rate cut back on the cards.”The Bank’s latest forecasts, published in August, suggested inflation would peak at 4% in September before declining towards the 2% target through next year.

politicsSee all
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Rayner’s return gives a lift to Labour’s gloomy backbenchers

The chamber had been almost empty at the start of the ministerial statement on Heathrow airport. But by the end, the Labour benches were almost full. Though this was nothing to do with the pull of the transport secretary, Heidi Alexander. It was Angela Rayner who was the main attraction.The former housing secretary hasn’t been heard from since her resignation in early September

about 10 hours ago
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Tory plans to deport some people who are legally in UK are ‘grotesque’, says Labour – as it happened

Labour is now saying that it is “utterly grotesque” that the Conservative party is proposing to deport people from the UK who have previously been told they have indefinite leave to remain.The party issued a statement after Conservative HQ confirmed that Katie Lam’s comments on this topic in an interview at the weekend are in line with official party policy. (See 5.06pm.) The Tories published proposals in the form of a private member’s bill earlier this year and clause 3 of the bill says indefinite leave to remain (ILR) should be revoked from some categories of migrants, including people who have been in receipt of benefits and people earning less than £38,700 a year

about 10 hours ago
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Deporting legally settled people is ‘broadly in line’ with Tory policy, says Badenoch’s office

The Conservative MP Katie Lam was “broadly in line” with party policy when she called for very large numbers of legally settled people to be deported from the UK, Kemi Badenoch’s spokesperson has said.Setting out Tory plans to retrospectively strip the right of indefinite leave to remain (ILR) from people who claim benefits, the spokesperson said this would not be the case for people getting the state pension, but he was unable to say whether someone could be deported if they received statutory maternity pay or shared parental leave.Speaking after prime minister’s questions, he said the key to whether or not someone was deported was if they were a “net contributor” in terms of tax and benefits, even though the party’s policy says this would happen if someone on ILR receives “any form of social protection”, an official term covering most benefits.In an interview with the Sunday Times, Lam, a Home Office shadow minister and Tory whip, said many people would need to lose their ILR status in order to ensure the UK is mostly “culturally coherent”, prompting criticism from other parties.Asked about Lam’s comments, Badenoch’s spokesperson said some had been “pulled out of context”

about 11 hours ago
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Chancellor hoping shift in tone on Brexit will ring true for key groups of voters

Rachel Reeves’ decision to pin the blame for the UK’s ailing economy on Brexit a month before a difficult and potentially unpopular budget could be considered high-risk given the lingering divisions and bitterness over the UK’s decision to leave the EU.But political analysts say she is aiming to appeal to voters who opted to leave but have changed their minds on this issue, young people who have joined the electorate in the nine years since the referendum, and remainers who are asking: what took you so long?In a speech on Tuesday, the chancellor said Brexit had caused more damage to the UK economy than official forecasters had previously outlined. She said costs had been “needlessly added to businesses” since the UK formally exited in 2021.Supporters of Brexit swiftly accused Reeves of attempting to “shift the blame for the dire state of Britain’s economy” ahead of November’s anticipated tax-raising budget. Some said she was “hunting for scapegoats”

about 13 hours ago
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Caerphilly byelection could signal ‘fundamental realignment’ of Welsh politics

When he steps out of the byelection campaign office opposite Caerphilly castle, the Plaid Cymru candidate, Lindsay Whittle, tends to hear a couple of different cries from passing motorists.“Some of them shout: ‘Good luck Linds!’ I love that,” Whittle said. “It implies we’re old friends even though I may not know them personally.” Others are rather less positive. “They yell: ‘Stop the boats!’ You hear that all the time

about 16 hours ago
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Scotland demands £24.5m from Westminster for Trump and Vance visits

The UK government needs to “step up” and reimburse the £24.5m cost of Donald Trump and JD Vance’s recent visits to Scotland, Holyrood’s public finance minister has said.Provisional costs of almost £24.5m for the two working visits have been published by the Scottish government.Ivan McKee said it was “ridiculous” that the UK government had so far refused to provide funding, framing both trips as private visits, despite the fact that the US president held meetings with the EU Commission president, Ursula von der Leyen, as well as the UK prime minister, Keir Starmer, during his time in Scotland in July

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670 Grams, Birmingham B9: ‘A cascade of small, meaningful bowls that just ooze flavour’ – restaurant review | Grace Dent on restaurants

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‘£30 for a ready meal?!’ Do Charlie Bigham’s new dishes really beat going to a restaurant?

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