UK inflation has probably hit its trough in September and is likely to bounce back again from October to the end of this year, tracking rising energy prices, BNP Paribas economist Caroline Newhouse-Cohen said in a note.
Tuesday, the Office for National Statistics said UK annual inflation slowed to a five-year low of 1.1% in September from 1.6% in August. Economists had expected the annual rate to ease to 1.3%. Core inflation, which is CPI excluding energy, food, alcoholic beverages and tobacco, dropped to 1.7% from 1.8% in August. Month-on-month, consumer prices remained flat.
Inflation should thus meet Bank of England 2% target on a two-year horizon but some downward risks still remain, the economist wrote. "Even if economic recovery is progressive, it is unlikely to strengthen further without a recovery in lending; with a possible sharp retrenchment in private sector domestic spending; and a weaker global recovery."
"Furthermore higher import prices could pass on consumer prices in the short term and in the longer term weak internal demand should hinder inflation and impact the extent to which inflation expectations remain anchored at levels consistent with price stability."
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.