Lucy Hooker
Business reporter

For a lot of people, the main takeaway from today's slightly lower-than-expected inflation rate of 3.8% is a sense of relief that their weekly shop isn't getting more expensive.

But as my colleagues have pointed out, for economists the big question is what does it mean for interest rates.

Inflation is of course still well above the Bank of England's 2% target, but signs of it easing should help pave the way for another cut in interest rates as early as at their next meeting on 6 November.

And above all, as Faisal noted earlier, it does take the pressure off the chancellor, just a fraction, as she sweats over final plans for her Budget in five weeks' time.

We're now ending our live coverage of today's inflation figures, but you can read more in our full report.

Image source, Getty Images

Let's catch up on some of the key lines after the Office for National Statistics released the latest inflation figures:

• Prices in the UK rose by 3.8% in the 12 months to September, making it the third month in a row that the rate has remain unchanged
• It means prices are still rising at almost double the Bank of England's 2% target rate, but it's lower than the earlier expectations of a jump up to 4%
• That will bring some relief that things seem to be settling down, writes deputy economics editor Dharshini David
• But our economics editor Faisal Islam notes that "nobody will be high fiving in the shopping aisles just yet"
• Meanwhile, Chancellor Rachel Reeves says she is still "not satisfied with these numbers" and hinted at help to come in November's Budget - the Tories say the government is to blame for keeping inflation high
• A slight drop in food prices, down 0.2% on a monthly basis, offers "a small glimmer of hope", says the ONS's chief economist - but grocery bills have been running high in recent months, as you can see in this chart

Katie Williams
Live reporter

As we just mentioned, today's inflation figure will not determine how much state pension payments rise in April.

Wage growth figures from over the summer will be used instead, in line with triple lock rules.

But how exactly does the triple lock work - and how much will the state pension come to next year?

The triple lock was first implemented in April 2011, and means that the state pension rises each year in line with either inflation, wage increases, or 2.5% - whichever is the highest.

The policy protects the value of the state pension from being eroded over time.

Currently, the full new state pension comes to £230.25 a week, equivalent to roughly £11,973 per year.

Not everyone qualifies for the full amount, depending on their National Insurance record. Those who reached state pension age before April 2016 also qualify for less under the old basic state pension.

If we use the the wage growth figure - 4.8% - to determine the state pension increase, it would mean:

• The new flat-rate state pension - for those who reached state pension age after April 2016 - would increase to £241.30 a week, or £12,547.60 a year, a rise of £574.60
• The old basic state pension - for those who reached state pension age before April 2016 - would to go up to £184.90 a week, or £9,614.80 a year, a rise of £439.40

Chancellor Rachel Reeves is likely to confirm the figures in her Autumn Budget.

Image source, Getty Images

The cost of living is always important to our finances but this month's has a particular extra impact for millions of people.

Typically, September's Consumer Prices Index (CPI) measure of inflation, which this time is 3.8%, is the benchmark for raising benefits the following April.

An automatic rise is applied to all the main disability benefits, such as Personal Independence Payment (Pip), attendance allowance and disability living allowance, as well as carer’s allowance.

Universal credit, the most common benefit which is claimed by seven million people, is among other benefits also expected to rise in line with inflation, but that is a decision for ministers.

The rise in the state pension in April is governed not by inflation, but by what is known as the triple lock.

Under that arrangement, the state pension goes up each year by either 2.5%, inflation, or earnings growth - whichever is the highest figure. And this time around, the latest data has confirmed the highest is earnings growth at 4.8%.

Lucy Hooker
Business reporter

When the ONS calculates the inflation rate it uses a huge basket of goods and services that reflects what we typically spend our money on.

But of course habits and tastes change over time, so the basket has to be updated.

The current basket - last updated in February - includes pre-cooked pulled pork instead of oven-ready gammon, which has disappeared from the market.

Minced turkey also got the chop, as did dining out at in-store cafeterias, such as in department stores. We are not doing that so much any more.

Yoga mats and virtual reality headsets made the cut - but DVD rentals were shelved.

Colletta Smith
Cost of living correspondent

Image source, Elaine Doran/BBC

"Since being on maternity leave I don’t look at costs any more because it does get you down quite a bit," says Amy Bamford, mum to eight-month-old Elias.

She says Elias is formula fed, so trying to feed him, herself and her husband is "a lot".

"It definitely makes me think: would you want another baby?" she says.

"I think it’s sad you have to come to terms with that. I’d want two quite close in age but whether or not we can afford it is another question," she adds. "I do put it out of my head quite a lot."

Lucy Hooker
Business reporter

Prices are still rising faster in the UK than other parts of Europe.

• In Germany, inflation is 2.1%
• In France, it is 0.8%
• And the EU as a whole is 2.4%

The US doesn't measure inflation in quite the same way, but their headline figure is 2.9%.

Last week, the International Monetary Fund predicted the UK would face the highest rate of inflation among G7 nations both this year and next, driven by rising energy and utility bills.

Colletta Smith
Cost of living correspondent

As my colleagues have been reporting this morning, on a monthly basis, the inflation rate for food and non-alcoholic drinks fell in price by 0.2% - but that difference still won't be easy to spot in your weekly shop.

For Courtney Paterson, who works for the NHS and has a baby, Aubrey, that rings true.

"I feel like you’re just watching everything that you’re spending," she says. "Baby milk is really expensive."

For Courtney, she is now back at work and her baby is just over a year old.

"I feel like there’s so much pressure to go back to work early because you can’t spend proper quality time with them if you’ve got no money," she says.

Tommy Lumby
Business data journalist

The chart below puts the latest food inflation figures in a bit more context.

Prices for food and non-alcoholic drinks rose 4.5% on average in the year to September, down from 5.1% in August.

But it’s always worth remembering that a drop in the inflation rate doesn’t mean prices are falling – they’re just rising less quickly.

And while food inflation is much lower than the post-pandemic peak of nearly 20%, it’s still running higher than it was before that surge.

Image source, Getty Images

After hearing from Chancellor Rachel Reeves and the Conservatives, we can now bring you some fresh reaction from the Liberal Democrats who accuse the government of "sitting on its hands".

Liberal Democrat Treasury spokeswoman Daisy Cooper says in a statement: “As families look on at the ever increasing costs of food bills, energy bills, children’s school uniforms and more, the winter is looking very expensive and very bleak."

Cooper goes on to say that ministers “need to roll up their sleeves and set out a proper plan" by addressing energy and food prices - which she says can be achieved by "backing farmers".

She adds that Labour needs to "cut red tape for business, and boost jobs by scrapping the damaging jobs tax".

Lucy Hooker
Business reporter

There is a lot of focus on food and energy prices, but the Office for National Statistics (ONS) also publishes an inflation figure that strips out those numbers. That's called core inflation.

Core inflation is helpful because food and energy are volatile - pushed up by failing crops or wars, for example. So core inflation is often seen as a better illustration of underlying pressures on prices.

In the year to September, core inflation was down to 3.5%. That's only a fraction lower than August's 3.6%, but that was a fall from July, so the trend is in the right direction.

There are signs of things settling downpublished at 08:24 BST

08:24 BST

Dharshini David
Deputy economics editor

Image source, Getty Images

There is relief for many that inflation didn’t hit the feared 4% last month - relief for households, the government and the Bank of England.

Inflation, of course, remains considerably above the Bank of England's target and while that persists, consumers may remain jittery about spending, uneasy about the future path of prices.

After all, during the spike in inflation a couple of years back, they experienced the equivalent of more than a typical decade’s worth of price rises in just two years. They are scarred.

But, there are signs that things are settling down - food prices are easing, for the first time in months. And economists feel that the impact of some of the other higher costs firms have been passing on - such as tax and wage rises - may be peaking.

Economists expect inflation to fall back towards the 2% target next year.

However, price rises in other areas, such as services - think hotels and restaurants - remain stubborn.

Chancellor Rachel Reeves says she is not satisfied with progress as yet and has hinted at help to come in November‘s Budget, with, we understand, some relief expected on energy bills.

And until then, if the Bank of England feels that inflation is firmly under control, it’s likely reluctant to resume cutting interest rates. Borrowers may not see further relief for several months.

Lucy Hooker
Business reporter

As my colleague just pointed out - today's figures might mean that a further interest rate cut is back on the cards for this year.

Inflation has come in lower than expected, prompting people to ask whether that makes a cut in interest rates - that are usually kept higher to control inflation - more likely.

That would be good news for borrowers, but less good news for savers.

KPMG says the 3.8% figure keeps a rate cut "on the table this year".

Capital Economics says it doubts it will prompt the Bank of England to make a cut in November, but boosts the chances for February.

Capital's chief UK Economist, Paul Dales, thinks we're seeing inflation peaking now and can then expect a fall in the October figure - which is released in November.

Image source, Reuters

We've just heard from the chancellor who says she is "not satisfied" with the unchanged 3.8% figure.

"For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out," Rachel Reeves says in a statement.

"That needs to change.

"All of us in government are responsible for supporting the Bank of England in bringing inflation down."

• A reminder: The 3.8% inflation figure for the year to September is the same rate as in July and August

Nobody will be high fiving in the shopping aisles just yet, but this is some respitepublished at 07:59 BST

07:59 BST

Faisal Islam
Economics editor

Image source, Getty Images

In absolute terms inflation remains too high, higher than other similar countries, and too visible in the everyday items seen in the shops.

At 3.8% in September that remains the case, just under double the official target of 2% set for the Bank of England.

But direction of travel matters significantly.

So the fact that today’s number was lower than expectations of a jump up to 4% is helpful. As is the fall in underlying “core inflation”, and a fair drop back in food price inflation, too. Nobody will be high fiving in the shopping aisles just yet, but this is some respite.

If this broad pattern sustains, then it will start to calm fears that the UK is an inflation outlier in the world. This perception had bled into other things, for example the higher costs for government borrowing for the already stretched Treasury.

As it happens, alongside the US, UK government borrowing costs have fallen notably over the past month, with 10-year borrowing below 4.5% and five-year borrowing costs approaching the lowest rates this year.

It’s good timing for the chancellor and should help the Budget maths - at least a bit.

It might also mean that a further interest rate cut this year is back on the cards.

Let's look in a little more detail at the individual areas of the economy that saw movements in price.

Some of the largest increases we saw in the 12 months to September were in housing and household services at 7.3% and the education sector which saw a rise of 7.2%.

Alcohol and tobacco was 5.8% more expensive than a year ago in September, followed by costs in the communication industries rising by 4.7%.

Food and non-alcoholic goods rose at 4.5% and the year to September saw the costs in the restaurant and hotels sector rise by 3.9%.

Transport costs saw a 3.8% increase, matching the CPI average, whereas clothing and footwear rose by just 0.5% and furniture and household goods 0.4%.

Lucy Hooker
Business reporter

The slightly lower-than-expected inflation rate is less good news for people receiving benefits.

As a reminder, the government uses September's inflation figure to determine how much it increases benefits by the following April. So a range of benefits will go up by 3.8% next year.

It won't have an impact on the state pension though. As a result of the triple lock arrangement, it will go up in line with rising average earnings, which are currently higher than inflation.

Image source, PA Media

We can bring you some political reaction now, with the Conservatives attacking the government for not "bringing inflation under control".

In a post on X, shadow chancellor Mel Stride says that inflation running at nearly double the Bank of England's target - which as a reminder, is 2% - is "pushing up the cost of living and punishing those Labour promised to protect".

He claims that national insurance increases, government borrowing and not having "the backbone to reduce spending" was contributing to inflation.

Stride finishes by saying that a Tory government would deliver £47bn in savings and produce a stronger economy.

Lucy Hooker
Business reporter

Image source, Getty Images

For the first time since March, we are seeing prices for groceries rising more slowly.

The inflation rate for food and non-alcoholic drinks was 5.1% in the year to August.

It's down to 4.5% for the year to September.

That's because on a monthly basis those goods actually fell in price, the ONS says, by 0.2%. (As the ONS's chief economist pointed out a short while ago on the Today programme, that hasn't happened since May last year.)

That difference won't be easy to spot in your weekly shop, but will still be welcome.

Let's bring you some more snap reaction from the Office for National Statistics (ONS) chief economist Grant Fitzner, who's just been speaking to the BBC.

Fitzner again references September's inflation figure showing the cost of food and non-alcoholic drinks have fallen for the first time since May last year.

"It is only a 0.2% fall in the month for food prices," he tells BBC Radio 4's Today programme.

"And they are still running quite high at 4.5%. But I think the fact that we have seen that steady increase dip a little is encouraging.

"It is just one month's numbers so we will have to see what transpires in future months - but nonetheless a small glimmer of hope there."

Fitzner also says the unchanged 3.8% figure is lower than what was expected by the Bank of England and the markets.