UK inflation remained unchanged month-on-month in September, putting pressure on the pound as it raised hopes for an earleir Bank of England rate cut.
The consumer price index remained at 3.8% on a year-on-year basis, the Office for National Statistics said, versus the market's 4.0% forecast.
Core CPI, which excludes more volatile prices such as food and fuel, dropped to 3.5% from 3.6%, when it had been expected to rise to 3.7%.
Services CPI, monitored by the BoE as a sign of the persistence of inflation, remained flat at 4.7%, also defying predictions for a small increase.
Food prices fell 0.2% month-on-month, mirroring declines seen elsewhere in Europe in recent months.
ONS Chief Economist Grant Fitzner said: "A variety of price movements meant inflation was unchanged overall in September.
"The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year.
"These were offset by lower prices for a range of recreational and cultural purchases including live events. The cost of food and non-alcoholic drinks also fell for the first time since May last year.
"Meanwhile, the annual rise in the cost of goods leaving factories continued to increase, driven by higher food prices."
Monica George Michail, associate economist at the National Institute of Economic and Social Research, said although ONS figures were lower than anticipated, inflation remained elevated by higher housing costs, food price pressures, and persistently strong wage growth, so she thinks the Bank of England "will remain cautious and pause interest rate cuts at least till February to avoid stirring up inflationary pressures again".
Some economists said September could be a turning point.
"We may be seeing the first evidence of inflation finally meeting resistance," said George Lagarias, chief economist at Forvis Mazars, with prices falling in food, beverages, recreation and culture.
"With unemployment rising, it is now more difficult for inflation to continue its stride upwards, and easier for the BoE to consider lowering rates."
Matt Swannell, chief economic Advisor to the EY ITEM Club, said today's CPI reading "should represent the peak for inflation, with the headline rate expected to cool gradually through Q4 and into 2026".
He said the main source of upward pressure on inflation came from 'base effects' in the fuel category, with a small 0.2% month-on-month fall in petrol prices between this August and September compared to a 3.9% decline between those months last year.
"The positive contribution from the energy category should begin to fade from October, with this year's increase in the energy price cap being much smaller than the one seen in 2024.
"Food price inflation is likely to soften as the impact of stronger sterling and weaker wholesale prices feeds through.
"Services inflation will likely ease gradually as pay growth slows, the impact of businesses passing on this year's increase in employers' National Insurance Contributions (NICs) fades and regulated price increases ease."
Swannel said the BoE has been most concerned about high inflation and the lack of passthrough of weaker pay growth to services inflation in recent meetings and the monetary policy committee "will likely need to see a little more progress before a majority will be willing to vote for further rate cuts".
Therefore, November's MPC meeting is "likely to be a closer call than previously thought", but he thinks rate will be left unchanged.
Martin Beck, ex of the ITEM Club and now at WPI Strategy, said: "A November rate cut from the Bank of England can likely be ruled out given still-elevated inflation and uncertainty over what precisely the Budget will contain.
"But we think markets are now correct in moving to price a cut in Bank Rate in December, a position we have held for some time.
"The combination of a looming fiscal squeeze, rising unemployment and softer wage growth points to a weaker demand backdrop than the Bank currently assumes."