We've been bringing you the latest analysis and reaction after the Office for National Statistics said UK inflation remained unchanged at 6.7% in the year to September.

We're going to be ending over live coverage here - but we'll leave you with the view of two economists as they look ahead to the Bank of England's next interest rate decision on 2 November.

Last month the bank held interest rates at 5.25%.

Jake Finney, economist at accountancy firm PwC, reckons that the bank's committee will again vote to hold rates because, even though the headline rate of inflation failed to budge in September, the core inflation rate dipped a little bit.

"Lower household utility prices should shave around 1.5 percentage points off headline inflation in October. Combine that with an overall easing of inflation pressures and inflation should end the year under 5%,” he said.

KPMG's chief economist, Yael Selfin said: “Despite ongoing pressures, the overall outlook for inflation looks more positive in the coming months.

"Together with the ongoing loosening of the labour market, this should be sufficient for the Bank of England to keep interest rates on hold as it takes stock of the impact of past tightening.”

For more on today's inflation rate figures - including the first fall in food prices for two years - you can read the main story here.

And there are lots more tips and help with understanding the cost of living crisis here.

• Inflation, which measures the rate of price rises for goods and services, was unchanged at 6.7% in the year to September, according to official figures
• Petrol and diesel prices, which rose compared to the same month last year, offset slowing price growth in other areas such as food and soft drinks
• The price of milk, cheese and eggs all decreased. In fact, cheese saw the biggest drop, down 3.3% between August and September
• The only food category that went up was fish, led by frozen prawns
• A number of state payments including disability benefits, incapacity benefits and carer's allowance will rise by today's inflation figure next April

Image source, .

Kevin Peachey
Cost of living correspondent

Today’s figures will prompt more debate about next year’s rise in the state pension, and the so-called triple lock.

That sees the state pension rise in April in line with the highest of average earnings, inflation, or 2.5%.

We now have all three of those numbers and the highest is… the increase in earnings of 8.5%.

So you would expect the new state pension to rise by 8.5%, in increase of £17.35 a week. Except there’s an extra wrinkle of complication.

Ministers are considering whether to exclude public sector bonuses from the earnings calculation, which would bring the increase below 8%.

Confusing? Sure is. Ultimately, it is the Work and Pensions Secretary Mel Stride who will make the final decision in the coming weeks.

Kevin Peachey
Cost of living correspondent

More now on those benefit increases for April - which are sure to create a lot of debate among politicians, charities and campaigners.

Convention has it that working-age benefits rise in April in line with the previous September’s inflation figure, i.e. the CPI number published today. That’s what happened earlier this year with a 10.1% increase.

But it’s a convention that has regularly been cast aside. During austerity, for example, then-chancellor George Osborne decided there should be no rise at all for four years.

Apart from the protected benefits - such as disability benefits, carer’s allowance, incapacity benefit and the severe disablement allowance - it will be for ministers to decide whether to raise the rest in line with today’s inflation number, or not.

According to the Resolution Foundation think tank, the decision will affect about nine million people on benefits such as universal credit and jobseeker’s allowance. Child benefit and statutory maternity pay are among other benefits to be affected.

The Bank of England uses inflation to set interest rates. If inflation rises too much, the bank lifts interest rates. Higher interest rates make it more expensive to borrow and should, theoretically, encourage people to save. An increase should mean banks lifting savings rates for customers. But it also means a rise in monthly mortgage costs

The Consumer Price Index (CPI) measure of inflation for the year to September is used to set some benefit payments that will go up in April. These include carer's allowance, incapacity benefits, disability benefits, jobseeker's allowance and statutory maternity pay

Prime Minister Rishi Sunak has made halving inflation this year one of his "five promises". He said this at the start of the year, when inflation was at 10.5%. At the time, he said: "I fully expect you to hold my government and I to account on delivering those goals."

Elaine Doran
Cost of living producer

Hannah Nagy, from Calderdale, West Yorkshire works in recruitment and has two children, aged six and three.

She’s had a pay rise of about 5% since April but says it “hasn’t really touched the sides particularly with the cost of shopping".

It's not going towards holidays or days out - it's going towards electricity, petrol, food, shopping - day-to-day living,” she told the BBC.

Hannah said the pace of price rises meant she felt like she was in a better position a few years ago when she earned less but things didn’t cost as much.

"We've seen increases in the cost of swimming lessons, dance lessons, everything."

In response to today's inflation figures, Labour’s shadow chancellor Rachel Reeves, says: “Working people have been left worse off because of 13 years of chaos and instability under the Conservatives.

“Britain is forecast to have the highest rate of inflation of any other major economy next year, meaning higher energy bills and prices in the shop."

Image source, PA

Bank of England faces dilemma on interest ratespublished at 08:49 British Summer Time 18 October 2023

08:49 BST 18 October 2023

Dharshini David
Chief economics correspondent

Inflation in the UK has been particularly persistent – and there’s a cost too to squashing it.

The Bank of England governor Andrew Bailey has said that the “last mile” in returning inflation to the bank's 2% target was the toughest.

Last month’s decision not to change interest rates was made by the narrowest of margins.

While many economists expect rates to remain unchanged again at 5.25% next month, that is not certain.

The bank faces a dilemma. Resurgent oil prices prompted by the crisis in Israel and Gaza is a reminder of how volatile and tricky inflation can be.

But hike again or not, the rate rises already in play risk a more marked economic slowdown.

Over half of mortgaged households have been exposed to higher rates as they refix loans - more will follow.

It takes even longer for the impact on their budgets to influence spending and perhaps jobs across the economy.

For all the resilience of the economy has shown, some fear that the risk of recession may haunt the coming months.

You can calculate inflation in various ways, but the main "headline" rate we and others report is the Consumer Prices Index (CPI) measure of inflation.

A further measure is "core" inflation. That excludes the price of energy, food, alcohol and tobacco so it strips out volatile items that might swing wildly.

The Bank of England considers this core number as well as CPI when deciding whether to alter interest rates.

Today's figures show core inflation fell, but by less than some economists expected - to 6.1% in the year to September from August's 6.2%.

Image source, .

As we mentioned earlier, inflation is the rate at which the price of goods and services is rising.

The Bank of England tries to limit this to 2% but the figure has been well above that for some time.

Typically, central banks respond to inflation by raising interest rates.

That makes it more expensive to borrow money to buy things and, so the theory goes, should encourage people to save more.

People who have already borrowed money and are repaying it with interest - such as those with mortgages - are among the hardest hit, as their monthly payments will go up.

The Bank has raises interest rates 14 consecutive times since December 2021 but last month held it at 5.25%.

Inflation affects different households in different ways - which is why the BBC has joined up with the ONS to create a personal inflation calculator.

It shows you what your rate is and what items in your household have gone up the most in the past year.

Click here for the personal inflation calculator.

Kevin Peachey
Cost of living correspondent

For anyone claiming benefits, today’s September inflation number is very important for your finances.

Why? Because it is the benchmark for how much benefits will go up by in April.

The idea is that benefits rise in line with prices - and today’s CPI number is the one used in those calculations.

Certain benefits, must rise - by law - in April by this amount. They include disability benefits, carer’s allowance, incapacity benefit, severe disablement allowance, industrial injuries benefit, additional state pension and guardian’s allowance.

Other benefits, most significantly universal credit, are at the discretion of the work and pensions secretary in discussion with the chancellor.

Campaigners say that is a massive call, because benefits make up a bigger chunk of income the poorer people are.

Can the government meet its target to half inflation this year?published at 08:12 British Summer Time 18 October 2023

08:12 BST 18 October 2023

Dharshini David
Chief economics correspondent

The failure of inflation to decline in September may have disappointed some analysts, and rising oil prices may boost prices at the pump, adding to the cost of living.

But economists say that on balance, the government’s goal might be achievable - helped by the very factor that triggered the spike in the cost of living; energy prices.

The new Ofgem price cap on domestic energy bills, which kicked in on 1 October, will, all other things being equal, spell a substantial reduction in October’s inflation figure (released next month), in excess of 1 percentage point. That will bring it far closer to the coveted 5.1% rate.

But the inflation path has been anything but smooth - and even a rate of 5.1% would mean prices still rising on average at a substantial clip, more than twice as fast as the Bank of England’s target.

Commenting on the latest data, Chancellor Jeremy Hunt, said: “As we have seen across other G7 countries, inflation rarely falls in a straight line, but if we stick to our plan then we still expect it to keep falling this year.

"Today’s news just shows this is even more important so we can ease the pressure on families and businesses.”

Image source, Reuters

Ben Boulos
BBC Breakfast Business Presenter reporting from Blakelaw Community Centre, Newcastle

“They are cutting back. They’re not feeding their families what they should be feeding them, because they can’t afford the food.”

Irene Teasdale is a volunteer at the Blakelaw Community Centre in Newcastle.

With food inflation in September at 12.1% - almost double the general rate of price rises - she sees the effect of that on people every day.

As well as running Mrs T’s cafe at the community centre, she also runs the FareShare food point where people can get essential groceries at a much discounted rate.

I asked her if she sees any sign that cost of living pressures are easing for her customers.

“No,” she tells me. “Not at the moment at all. It’s really hard. We just hope things can improve.”

As we've been reporting, a fall food and non-alcoholic drink prices has been offset in high petrol and diesel costs to keep inflation at 6.7%.

The ONS data gives us more detail on which food and drink products went down in price between August and September - namely milk, cheese and eggs as well as mineral waters, soft drinks and juices.

The only food to rise in price was fish, with frozen prawns going up the most.

It's important to note, however, that food and drinks prices have still gone up by 12.1% in the year to September.

The ONS's chief economist Grant Fitzner goes on to concede that people won't be happy with today's inflation figure.

"There may be disappointment out there," he tells the BBC. "But we have seen significant falls in headline inflation over the last six months."

That's true. UK inflation peaked at an eye-watering 11.1% in October last year and has been steadily easing, particularly in the early summer months.

But will it meet Prime Minister Rishi Sunak's pledge to halve inflation to just over 5% by the end of this year?

There are some challenges ahead.

"In terms of what is coming up, people will be watching petrol and diesel prices in the coming months quite closely," said Fitzner.

"And, of course, next month we also see the new energy price cap kick in for October which fell by around 7%. So, some negative, some positive factors."

Grant Fitzner, chief economist at the Office for National Statistics, which has just released the inflation data, tells the BBC that the reason why the figure is unchanged is because some price falls have been cancelled out by stubbornly high prices for other goods and services.

So, on the one hand the price of food, drink, household appliances and plane tickets eased in the year to September, but on the other the cost of petrol, diesel and hotel accommodation remained high.

But Fitzner adds: "This is not unusual. If you look across Europe, many countries have seen either periods lately of no change or in some cases actual increase in the headline rate before they started to resume their fall."

However, as our graphic shows, the UK's rate remains above our European cousins.

Image source, .

This handy graph gives you a good sense of how inflation has risen well above the 2% Bank of England target in the last couple of years. The September figure remains unchanged from August.

Image source, .

No change in the inflation rate will be disappointing to many.

Petrol and diesel costs are to blame, according to the Office for National Statistics.

On a slightly happier note food and non-alcoholic drink prices fell - this is the first drop for two years, since September 2021.

Food and non-alcoholic beverage prices fell by 0.1% between August and September, the ONS says.