UK inflation drops below 2% target in September, weakening pound, and likely meaning a small increase in state benefits next year.   16:01 Bond trading giant Pimco is optimistic that Britain’s new government is unlikely to upset investors in its first budget this month.

Inflation in the U.K. has fallen to its lowest level in more than three years, a drop that has cemented market expectations that the Bank of England will lower interest rates at its next policy meeting.

This month's inflation rate is also normally used to set April's increase in benefits including jobseeker's allowance, maternity allowance, housing benefit and universal credit.

UK inflation fell more than expected to a three-year low of 1.7% in September, prompting the pound to fall and traders to increase bets on further rate cuts from the Bank of England this year. Wednesday’s data release by the Office for National Statistics showed inflation was back under the BoE’s 2% target for the first time since April 2021.

The slowdown in consumer price increases comes as the European Central Bank is expected to cut interest rates.

Annual inflation rate in the Euro Are was revised lower to 1.7% in September, compared to initial estimates of 1.8%, and 2.2% in August. CPI decreased 0.1% in September 2024 over the previous month. ETFs: (EWG),

Canadian inflation cooled to 1.6% in September, but does that mean the Bank of Canada could cut interest rates by 50 basis points at its next meeting? Click to read.