Professor Joe Nellis is economic adviser at MHA, the accountancy and advisory firm

The UK may finally be moving beyond the stalemate that has held headline inflation at 3.8% for the past three months. Inflation fell to 3.6% in October, signalling that the long-awaited transition to a more stable economic environment may be beginning to take shape and further easing of interest rates is imminent.

After months of frustration — where UK inflation stubbornly refused to budge downwards despite easing global pressures — this improvement offers consumers a rare moment of encouragement. Many households will welcome any sign that the intense squeeze on the cost-of-living over the past three years is starting to lift, even if their weekly shop still feels painfully expensive.

Services inflation, largely driven by wage growth, rent increases, and higher costs across hospitality, travel, and personal services, remain elevated, and this stickiness reinforces why the Bank of England has been reluctant to talk up rate cuts. But now the time is right to for action — unless the inflationary landscape changes dramatically in the next month, a timely interest rate cut in December is almost certain.

This sets the stage for the Chancellor’s long-anticipated Autumn Budget. An improving inflation backdrop strengthens the argument that the worst of the cost-of-living crisis has passed, but Government departments face intense constraints, borrowing remains high, and long-term spending commitments leave little headroom for dramatic Budget announcements.

Yet today’s figures are good news for the Chancellor ahead of the Budget. The financial markets were unsettled by reports of instability at the heart of the Government last week, but this volatility has cooled and will only be helped by the prospect of lower inflation and upcoming interest rate cuts.

Looking ahead, today’s release marks a turning point rather than a finish line. While the headline rate is finally shifting in the right direction, the task now is to reinforce that progress with Budget policies that encourage productivity, investment, and stability. If these gains are sustained, 2026 could emerge as the year when real incomes grow again, business confidence gradually recovers, and the UK economy begins to rebuild momentum.