Cost of living pressures are likely to ease further when new figures may show that annual inflation has fallen below 2% for the first time in more than three years.

Analysts believe consumer price inflation (CPI) of 2.2% in August will dip to 1.8% or 1.9% in September, below the Bank of England’s 2% target. The bank is still forecasting an above-target 2.1%.

Any fall in price growth will increase pressure on the bank’s monetary policy committee (MPC) to cut interest rates next month.

Falling energy prices and an easing of supply constraints have contributed to a sharp fall in annual inflation from a peak of 11.1% at the time of the mini-budget in October 2022.

Analysts at Barclays said inflation could fall as low as 1.7% and others are expecting a below-target figure on Wednesday when the data is published.

Sanjay Raja, chief UK economist at Deutsche Bank, said.: “After headline CPI moved sideways in August, we expect inflation to drop to a new cyclical low in September.”

Bank of England governor Andrew Bailey said last week that it may be “a bit more aggressive” in cutting interest rates. His comments coincided with new data on Friday showing a return to growth in August, but an underlying trend of a slowing economy and declining wage rises.

The MPC cut interest rates in August, the first time in four years, and markets have priced in a further cut next month.

In the corporate calendar, housebuilder Bellway reports full-year profits on Tuesday with its shares at their highest mark since early 2022, buoyed by the prospect of lower interest rates rising mortgage approvals.

The company published an upbeat trading update in August in which it flagged higher reservation rates, an improved order book and expectations that completions would start to grow in the fiscal year to June 2025.

AJ Bell analysts note that chief executive Jason Honeyman also highlighted the new government’s aspiration to boost housebuilding volumes.

“The increase in sales per outlet per week to 0.51 in the year to June 2024 from 0.46 in the preceding period offered some tangible sign of a turn, as did the increase in forward sales,” said the Bell report.

It adds that analysts and shareholders will watch out for any further cladding remediation and building safety costs. Bellway has taken provisions worth £536 million thus far, including an additional £16m in the first half of the year just ended.

DIARY

Sunday 13 October

• Chinese inflation figures

Monday 14 October

• International Investment Summit, London

Tuesday 15 October

• Full-year results from Bellway
• First-half results from YouGov
• Trading statements from Robert Walters and Reach
• UK unemployment and job vacancies
• UK wage growth

Wednesday 16 October

• First-half results from Whitbread and Vertu Motors
• UK inflation

Thursday 17 June

• Trading statements from Rentokil Initial, Schroders, Deliveroo, Dunelm, and Travis Perkins
• Interest rate decision from the European Central Bank
• EU inflation

Friday 18 October

• UK retail sales
• Japanese inflation