<p>The UK&rsquo;s inflation rate remained unchanged at <strong>3.8% in September</strong>, providing a glimmer of relief to millions of households still grappling with the cost-of-living crisis. According to the latest figures released by the <strong>Office for National Statistics (ONS)</strong>, food price growth slowed for the first time in six months &mdash; a key factor in stabilizing overall inflation.</p>

<p>Food and non-alcoholic beverage prices rose just <strong>0.4%</strong> in September, compared to <strong>1.2%</strong> in August. Economists say this slowdown helped offset rising housing and transport costs. The <strong>core inflation rate</strong>, which excludes volatile items such as food and energy, also held steady at <strong>4.1%</strong>, signaling that the worst of the inflation surge may finally be over.</p>

<p>Chancellor <strong>Rachel Reeves</strong>, preparing to present her first full <strong>autumn budget</strong>, described the figures as &ldquo;encouraging&rdquo; and said that the government&rsquo;s fiscal measures were beginning to restore confidence in the economy.</p>

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<p>&ldquo;We&rsquo;re starting to see the benefits of stability and sound fiscal policy,&rdquo; Reeves said. &ldquo;But there&rsquo;s still work to do to ensure families and small businesses feel the impact where it matters most &mdash; in their wallets.&rdquo;</p>
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<p>Economists note that while inflation is cooling, <strong>high mortgage rates</strong>, <strong>energy bills</strong>, and <strong>housing shortages</strong> continue to burden British consumers. The <strong>Bank of England</strong> has held interest rates at <strong>5.25%</strong>, the highest level since 2008, as it works to bring inflation closer to its 2% target.</p>

<p>Some analysts now predict that the Bank could begin discussing interest rate cuts early in 2026 if inflation continues to trend downward. &ldquo;We&rsquo;re seeing the first real signs of price stability,&rdquo; said <strong>Dr. Michael Hargreaves</strong>, senior economist at the <strong>London School of Economics</strong>. &ldquo;If energy prices remain steady and wage growth continues, the UK could see real income growth by early next year.&rdquo;</p>

<p>The <strong>ONS report</strong> highlighted that lower prices for dairy products, bread, and meat contributed significantly to the drop in food inflation. Energy prices also stabilized after two years of extreme volatility. However, rental costs remain elevated, with average rents in England up <strong>7% year-on-year</strong>, putting sustained pressure on younger households.</p>

<p>In the financial sector, the <strong>pound sterling</strong> fell slightly against the dollar following the inflation announcement, as traders speculated on the possibility of interest rate cuts. Meanwhile, the <strong>FTSE 100</strong> gained modestly as investors welcomed the potential for lower borrowing costs in the coming quarters.</p>

<p>Chancellor Reeves&rsquo; upcoming budget is expected to prioritize <strong>economic stability, infrastructure investment, and green energy transition</strong>. Observers expect potential incentives for small and medium enterprises and continued support for families dealing with rising living expenses.</p>

<p>Retailers, too, are cautiously optimistic. The <strong>British Retail Consortium (BRC)</strong> reported a slight increase in consumer spending during September, driven by modest price cuts and early holiday shopping. &ldquo;Consumers are becoming more price-sensitive, but the slowdown in inflation has given them a bit more confidence to spend,&rdquo; said BRC economist <strong>Helen Dickinson</strong>.</p>

<p>With the next <strong>general election</strong> approaching in 2026, the government&rsquo;s handling of inflation and the broader economy will be under intense public and political scrutiny. Holding inflation steady at 3.8% offers Prime Minister Keir Starmer&rsquo;s administration a rare opportunity to claim progress amid global economic uncertainty.</p>

<p>As the year closes, the UK economy appears to be entering a phase of slow but steady recovery &mdash; though much will depend on whether inflation continues to cool and wage growth keeps pace with prices</p>