Analysts’ consensus forecast is for the Consumer Price Index (CPI) to have fallen below five per cent in October.
Prices rose 6.7 per cent in September from 12 months earlier, which was the highest level among G7 rich nations.
Sunak, who this week carried out a major reshuffle of his cabinet before a general election next year which his Conservative party is forecast to lose, pledged to halve inflation in 2023. It stood at just above 10 per cent in January.
“It looks like inflation will hit the government’s target well before the end of the year — falling below five per cent in October,” noted Sarah Coles, head of personal finance at Hargreaves Lansdown.
“After rising through the summer and early autumn, petrol prices fell in October… Meanwhile, early indications show that food inflation is likely to have fallen for another month too — and the prices of some staples including milk and pasta may actually have dropped.”
Analysts said a sharp fall in the annual inflation rate could see finance minster Jeremy Hunt cut taxes in his latest budget announcement due next week.
They add that the drop in UK inflation since the start of the year from the highest level in decades is thanks largely to interest-rate hikes from the independent Bank of England (BoE) and cooler energy prices worldwide.
Interest-rate hikes by other major central banks, including the US Federal Reserve and European Central Bank (ECB), have helped bring down elevated inflation in the world’s biggest economy and the eurozone.
US consumer inflation cooled more than expected last month, government data showed Tuesday.
The CPI inflation gauge increased 3.2 percent in the 12 months to October, down from 3.7 percent a month earlier.
Global inflation remains high, however, with the Fed, BoE and ECB all having an annual inflation target rate of two percent.
Economists have stressed that stubbornly-high inflation could see central banks keep interest rates at high levels for many more months — and may even be forced to keep on hiking borrowing costs.
This has fuelled worries that major economies could soon enter recession.
Official UK data Tuesday showed wages growth above CPI inflation, which is seen as a double-edged sword.
“People are finally feeling the benefit in their pay packets and with inflation expected to have cooled significantly last month it is an indication that the worst of the cost-of-living squeeze might be over,” said Danni Hewson, head of financial analysis at AJ Bell.
However, “if households are feeling more confident and have a bit more room in the budget they are likely to spend that cash, which could prove inflationary”.
At the same time, many Britons are still struggling to pay bills.
Rate hikes have worsened the situation because retail banks follow suit by hiking the cost of repayments on mortgages and other loans.
Britain’s CPI reading meanwhile does not reflect a surge in the cost of housing rents.
UK annual inflation struck a 41-year peak at 11.1 percent in October 2022, stoked by spiking energy prices after the invasion of Ukraine by major oil and gas producer Russia.