Having seen prices jump fully 2.0 percent on the month in October 2022, inflation was always going to slow sharply last month. However, with the CPI only unchanged at September's level, the deceleration was sharper than expected. At 4.6 percent, the October rate undershot the market consensus by 0.2 percentage points and made for the lowest outturn since October 2021. Inflation now stands 2.6 percentage points above target.

There was also good news on the core rate for which a 0.3 percent monthly increase in prices was small enough to trim its yearly gain from 6.1 percent to 5.7 percent, matching its weakest print since February 2022.

The main downward contribution to the change in the annual headline rate came from housing and household services where prices fell 1.9 percent on the month versus an energy-led 8.7 percent spike in the same period in 2022. This alone subtracted more than 1.5 percentage points. Restaurants and hotels (0.0 percent after 1.0 percent) and clothing and footwear (0.9 percent after 1.6 percent) also weighed. On the upside, the only positive contribution of any size came from education where prices rose 2.6 percent after a 2.3 percent gain last year. Overall goods inflation slumped from 6.2 percent to 2.9 percent while the rate in services dropped 6.9 percent to 6.6 percent, matching its weakest mark since January.

If nothing else, today's CPI update should put a smile on the face of PM Rishi Sunak. Late last year, he promised that the inflation rate (then 10.7 percent) would be halved by the end of 2023 a feat now achieved with a couple of months to spare. However, the BoE should also be at least cautiously happy with the broad-based deceleration and the likelihood of Bank Rate having peaked is now all the higher. The October data put the UK's RPI at minus 4 and the RPI-P at 8, meaning that economic activity in general is behaving much as expected.

At 6.7 percent versus expectations for 6.5 percent, consumer price inflation was steady in September. However, strongly negative base effects will help to ensure a sharp slowdown in October, the consensus being 4.8 percent.

The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households in the UK. It is calculated using the same methodology developed by Eurostat, the European Union's statistical agency, for its harmonised index of consumer prices (HICP). The CPI is the Bank of England's target inflation measure.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as the UK, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. Inflation is an increase in the overall price level of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.

Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

For monetary policy, the Bank of England generally follows the annual change in the consumer price index which is calculated using the European Union's Eurostat methodology so that inflation can be compared across EU member states.