The annual rate of consumer price inflation declined to 4.6% from 6.7% in September, beating economists’ expectations for a fall to 4.8%.
The largest downward contribution to the monthly change in inflation came from housing and household services, the ONS said, where the annual rate for CPI was the lowest since records began in January 1950.
The figures showed that gas costs fell by 31%, versus a 1.7% increase in September. Meanwhile, electricity costs were down 15.6% in October compared with a 6.7% rise the month before.
ONS chief economist Grant Fitzner said: “Inflation fell substantially on the month as last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year.
“Food prices were little changed on the month, after rising this time last year, while hotel prices fell, both helping to push inflation to its lowest rate for two years.”
On a monthly basis, CPI was unchanged in October, compared with a rise of 2.0% last year.
Core CPI – which excludes energy, food, alcohol and tobacco – rose 5.7% in the year to October, down from 6.1% the month before. Economists were expecting 5.8%.
Paul Dales, chief UK economist at Capital Economics, said: “Looking ahead, our forecast is that the downward trends in CPI and core inflation will stall over the next few months before starting to edge lower again in February.
“But even then, we think the restrictions on labour supply and the stickiness of inflation expectations will mean that inflation fades slowly rather than suddenly. That explains why we think the Bank won’t feel comfortable cutting interest rates until late in 2024 rather than in mid-2024 as priced into financial markets.”