The rate of inflation has eased to 3.6%, according to official figures that make for better reading for the economy and chancellor ahead of the budget.

The Office for National Statistics (ONS) said the slowdown in the consumer prices index (CPI) measure, from the annual 3.8% rate recorded the previous month, was largely down to weaker housing effects, especially from energy bills.

ONS chief economist Grant Fitzner said: “Inflation eased in October, driven mainly by gas and electricity prices, which increased less than this time last year following changes in the Ofgem energy price cap.

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“The costs of hotels was also a downward driver, with prices falling this month. These were only partially offset by rising food prices, following the dip seen in September. 

“The annual cost of raw materials for businesses continued to increase, while factory gate prices also rose.”

The final part of that statement will be seen as a risk to expectations from economists that the peak pace for price increases is now behind the UK economy after a spike this year that has caused concern among interest rate-setters at the Bank of England.

October’s data marked the first decline for the inflation rate since March.

It has been widely believed that the figure will ease gradually in the months ahead, helping to cushion household spending power from a slowdown in wage growth.

But key risks include shocks within the global economy and the impact of potential measures in the budget next week.

The chancellor’s first budget was blamed by business groups and economists for helping push up costs since April.

Then, firms passed on hikes to employer national insurance contributions and minimum pay levels imposed by Rachel Reeves.

That has been reflected in many supermarket prices, for example, as they are among the biggest employers in the country. The ONS data showed that food inflation rose from 4.5% to 4.9%.

Other factors have contributed too such as high global demand for chicken and shrinking UK cattle herds pushing up beef costs.

Poor cocoa and coffee harvests have resulted in prices spiking too this year, with chocolate standing at record levels this summer.

While food has been a main contributor to inflation, so too has energy, though bills have stabilised this year thanks largely to healthy global supplies of natural gas.

Petrol and diesel costs could become more of a problem for inflation, however.

The AA has blamed global factors for UK fuel prices nearing their highest level for seven months.

The motoring group said that but for the 5p cut in fuel duty under the last Conservative government, pump prices would have returned to pre-COVID levels.

There have been rumours that Ms Reeves could remove that reduction next Wednesday.

She said of the ONS figures: “This fall in inflation is good news for households and businesses across the country, but I’m determined to do more to bring prices down.

“That’s why at the budget next week I will take the fair choices to deliver on the public’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”

When asked if she recognised a contribution to rising inflation from her first budget, she responded: “Food prices fell last month and they have risen this month.

“But I do recognise that there’s more that we need to do to tackle the cost of living challenges. And that’s why one of the three priorities in my budget next week is to tackle the cost of living, as well as to cut NHS waiting lists and cut government debt.”

The Bank of England’s most recent forecasts see its 2% inflation target not being met until the early part of 2027.

Stubborn inflation in the UK has threatened the pace of interest rate cuts but policymakers are expected, by financial markets at least, to agree a further quarter point reduction next month on the back of weakness in economic growth and the labour market.

Official figures last week showed the UK’s unemployment rate rising to 5% from 4.8% and the pace of wage growth continuing its gradual decline.

Economic output during the third quarter of the year also slowed further to stand at just 0.1%.

The Bank’s rate-setting committee voted 5-4 earlier this month to maintain Bank rate at 4%.

That decision allowed for more data to come in – such as the employment and growth numbers – and, crucially, for the budget to have taken place, ahead of its next meeting.

Global stock markets are seeing sharp declines and bitcoin has lost this year’s gains as worries intensify that the AI (artificial intelligence) boom has become a bubble fit to burst.

A small tear has certainly appeared in US tech stocks over the past week, with the tech-heavy Nasdaq closing below a key technical indicator for the first time since late April on Monday.

Key worries include not only high valuations but also vast investment spending in the AI space harming and delaying investor returns.

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Sharp stock market falls were seen across large parts of Asia and Europe following the retreat on Wall Street.

Japan’s Nikkei 225 shed more than 3% while the Hang Seng in Hong Kong lost 1.7%.

In Europe, the FTSE 100 was down by just over 1% while Germany’s DAX and the CAC in Paris were 1.2% and 1.3% lower in early afternoon dealing.

Nerves are jangling over tech as the market awaits financial results from Nvidia on Wednesday night.

They are likely to be crucial in determining the path for shares ahead.

The world’s largest company by market value is the beating heart of Wall Street’s artificial intelligence boom and any sign of slowdowns, for both revenues and profits, will be catalysts for further sell-offs.

Fears have been growing for months that record values are overdone.

Stocks linked to AI suffered particularly on Monday, building on declines seen last week, and futures indicated more pain to come when trading begins in the US, though drops were expected to be limited.

Financial analysts said baskets of top AI-linked stocks had now entered so-called correction territory, falling more than 10% in short order this month.

Others pointed to an impact on confidence in the crypto market.

Bitcoin, which hit a $125,000 spot rate level only last month, stood at $91,000 on Tuesday.

It had begun the year around the $94,000 level.

Victoria Scholar, head of investment for Interactive Investor, said: “This year was meant to be the year of the bitcoin bulls supported by a highly crypto-friendly administration in the White House and Trump’s ‘less is more’ approach towards regulation.

“However, fears of an AI bubble and concerns about the market’s heavy dependence on a handful of tech giants have caused investors to dial back their exposure to speculative assets such as bitcoin.

“There’s a general sense of nervousness that has captured the market mood lately and bitcoin appears to be in the firing line.”

Wider sentiment has also been harmed by weaker bets on the prospects for a further interest rate cut by the US central bank next month.

Many financial analysts described the stock market shifts as a healthy correction, given all the uncertainties which include the possibility of a US court ruling against Donald Trump’s reciprocal tariffs regime ahead.

Mike Gallagher, director of research at Continuum Economics, told Sky’s US partner CNBC that the market action implies equities could fall about 5% from recent highs – or “a bit more”.

“There’s some things coming over the horizon that make you want to take a bit of risk off the table,” he told the channel’s Squawk Box Europe show.

“So, part of it is just natural pocket taking, part of it is thinking, ‘well, is the macro story going to be perfect? No, it’s not.”

He concluded: “To get a major sell-off, you may need major bad news, and that we haven’t actually got to that point yet.”

In the hour after Wall Street opened, the tech company-heavy Nasdaq Composite had dropped nearly 1.8%.

The S&P 500 US index of companies relied on to be stable and profitable, lost more than 1% and the index of 30 major companies listed on US stock exchanges, the Dow Jones Industrial Average (DJIA), dropped 1.3%.

A crackdown on online pricing has seen investigations opened into eight companies, with a further 100 facing warnings over their conduct.

The competition watchdog said it was formally examining practices at StubHub, viagogo, AA Driving School, BSM Driving School, Gold’s Gym, Wayfair, Appliances Direct and Marks Electrical.

The Competition and Markets Authority (CMA) said the 100 other companies, which it did not identify, were getting letters outlining concerns about additional fees and sales tactics.

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The action against StubHub and viagogo – part of the same company after a 2021 merger – was revealed as the government reportedly prepares to separately confirm a ban on the resale of tickets for live events above their face value.

It is part of a long-threatened crackdown on touts to shield consumers from rip-off prices.

The regulator’s separate action falls under the new Digital Markets, Competition and Consumers Act which gives it additional powers to protect consumers.

The CMA said StubHub and viagogo were under review “regarding the mandatory additional charges applied when consumers buy tickets – and whether or not these fees are included upfront”.

The AA Driving School and BSM Driving School were being investigated over their “presentation of mandatory fees on these sites”, the CMA said, “specifically, whether these fees are included in the total price the consumer sees at the beginning of the purchase process.”

Gold’s Gym is under investigation over its presentation of a one-off joining fee for its annual membership, and whether the way it presents this fee breaks the law.

It explained that the examination of homeware retailers Wayfair, Appliances Direct, and Marks Electrical was related to whether their time-limited sales “ended when they said they would, or whether customers are being automatically opted in to purchasing additional services”.

Commenting on the CMA’s action an AA Driving School spokesperson said: “We are comfortable that the £3 booking fee for lessons is already transparent and in line with the CMA’s rules and are more than happy to additionally notify customers earlier in the journey as well, which we have already done.”

The other companies were yet to comment.

The CMA’s first major act under the new digital market rules was to give itself special oversight over Apple and Google.

The CMA’s so-called “strategic market status” rulings mean both companies will face specific obligations to limit their dominance in smartphone and tablet operating systems (iOS and Android respectively), app distribution and browsers.

Commenting on its latest inquiry, CMA chief executive Sarah Cardell said: “At a time when household budgets are under constant pressure and we’re all hunting for the best deal possible, it’s crucial that people are able to shop online with confidence, knowing that the price they see is the price they’ll pay, and any sales are genuine.

“Whether you’re spending your hard-earned cash on concert tickets or driving lessons, joining a gym or buying furniture and appliances for your home, you deserve a fair deal.

“It’s our job to protect consumers from misleading prices and illegal pressure selling and today marks an important milestone as we take action across the economy to make sure businesses do the right thing by their customers.”

“Since the launch of the new regime, we’ve been working hard to help businesses understand the law. But alongside supporting businesses to comply, we’ve always been clear that we will take swift action where we suspect potentially serious breaches of the law.

“This is just the start of our work. Any businesses who break consumer law should be in no doubt we will stamp out illegal conduct and protect the interests of consumers and fair-dealing businesses.”