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Britain has become an “outlier” on inflation as minimum wage rises pressure employers to pass on costs to consumers, economists have warned.
UK inflation in October dropped for the first time in five months, official data showed on Wednesday, as energy prices rose at a slower pace than last year.
The consumer prices index (CPI) rate of inflation dropped to 3.6pc in October, having been stuck at 3.8pc since July, according to the Office for National Statistics (ONS).
Economists said this remained “stubbornly high” compared to the eurozone, where inflation dropped to 2.1pc over the same period.
Julian Jessop, economics fellow at the Institute of Economic Affairs think tank, said the “worryingly large gap” was a result of the Chancellor’s decision to raise costs for businesses.
Rachel Reeves raised taxes by £40bn in the Budget last year, including increasing employer National Insurance contributions and the national minimum wage from April. Bosses expect more tax rises to be announced in her Budget next week.
“This gap can mostly be explained by Government policy choices, including the large increases in labour and other business costs since last autumn’s Budget,” said Mr Jessop.
Grant Fitzner, chief economist at the ONS, laid the blame for an increase in wholesale inflation on higher wage pressures faced by businesses.
“The wage increases we saw earlier this year are one of the factors that businesses are reporting is weighing on their profitability,” he told BBC Radio 4’s Today programme.
“And some of that, of course, is being passed through into higher prices.”
Sir Keir Starmer blamed the Tories for persistent price rises. During Prime Minister’s Questions on Wednesday, he said the “country is still paying the price” after inflation rose to 11.1pc in October 2022 under the Conservatives.
Mr Jessop wrote on X: “As most people will also remember, this was during a global energy crisis – and inflation surged to similar levels in the rest of Europe.
“This time, the UK is clearly an outlier.”
Tory leader Kemi Badenoch said inflation “has nearly doubled” since Labour came to power. She pointed to the ONS figures showing food inflation rose from 4.5pc in September to 4.9pc in October, which she said was “making life miserable for all those people out there”.
However, there was some comfort for mortgage holders as traders raised bets on the Bank of England cutting interest rates next month following the drop in inflation.
Money markets indicated there was an 87pc chance of a reduction in borrowing costs in December, compared to 79pc before the CPI data was published.
Yael Selfin, chief economist at KPMG UK, said the drop in CPI from 3.8pc to 3.6pc in October showed “further progress on disinflation” which was “positive” for policymakers.
Paul Dales, chief UK economist at Capital Economics, added: “The fall in CPI inflation from 3.8pc in September to 3.6pc in October is the second softish inflation release in a row and could well prompt the Governor of the Bank of England to put on a red suit and white beard and cut interest rates from 4pc to 3.75pc on December 18.”
Others warned the Budget could derail hopes for a cut to interest rates if it pushes up business costs.
ICAEW economics director Suren Thiru said Ms Reeves’s speech would be a “double-edged sword for inflation as while tax rises can be deflationary by dampening demand in the economy, the upward pressure from any rise in business costs risks giving inflation a second wind”.
He said: “Though the conditions for a December interest rate cut are falling into place, the Budget is a last obstacle as rate-setters will want to gauge the effect of the policies announced before authorising another rate reduction.”
Thank you for following our inflation coverage. We will have more of the latest business and economic news here.
Rachel Reeves will “shape the inflation outlook” in the Budget next week, a wealth manager said.
Rathbones’ head of market analysis John Wyn-Evans said: “The die is cast. There is nothing of note now and November 26. After what feels like months of speculation, we are now at the sharp end; now, conversely, the Chancellor’s decisions next week will shape the inflation outlook and the Bank of England’s next move.”
John Hudson, fund manager at Premier Miton UK Growth Fund, said: “Whilst falling slightly less than forecast, consumers will be relieved to see the UK’s stubbornly high level of inflation starting to come down.
“Last year’s Budget contained inflationary policies such as increasing National Insurance contributions for employers. That appears less likely this year, potentially paving the way for further rate cuts as inflation continues to fall.”
Germany’s oldest private bank has brought forward its forecast for interest rate cuts after the latest drop in UK inflation.
Andrew Wishart, senior UK economist at Berenberg, had forecast the Bank of England would wait until next year to lower interest rates again after keeping them on hold at 4pc this month.
He said slower growth in wages and services prices would persuade Governor Andrew Bailey to vote to bring down borrowing costs at the Bank’s next meeting in December.
But he warned the Bank of England would likely remain wary with inflation still well above its 2pc target.
“Large price rises in the areas most acutely affected by the sharp increase in labour costs this year show that the Bank of England must be wary of prolonging high inflation by cutting interest rates too far too quickly,” he said.
“With signs that past falls in Bank Rate are already supporting an increase in nominal demand, we doubt that a cut in December would signal a rapid further reduction in interest rates ahead. Our central forecast is that the BoE reduces interest rates once more in the first quarter of 2026 to 3.5pc.”
The FTSE 100 has been subdued following the latest official figures showing inflation fell last month, but by less than expected.
The UK’s benchmark index was down 0.2pc, although the domestically focused FTSE 250 was up 0.2pc after the fall in inflation cemented the case for cuts to interest rates next month.
The internationally focused FTSE 100 was also hit by nervousness on Wall Street ahead of Nvidia’s third quarter results later, which could be a make-or-break moment for confidence in AI stocks.
Nvidia’s earnings, due after markets close, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year.
However, investors have grown concerned that companies are investing too heavily in the new technology with returns still a long way off. The S&P 500 has dropped 1.5pc already this week, with the Nasdaq Composite down 1.9pc.
Societe Generale analysts said Nvidia’s earnings come “at a juncture of increased fragility over the outlook, with valuations under pressure as we move closer to year end”.
Shares of the AI giant gained 1.4pc in premarket trading after falling about 4.6pc in the last two sessions.
Ahead of the opening bell today, the Dow Jones Industrial Average was up 0.2pc, the S&P 500 was up 0.3pc and the Nasdaq 100 gained 0.4pc.
Inflation in the eurozone inflation will fall much further than in the UK next year, economists have warned, in a further signal of Britain’s “outlier” status on price rises.
Eurozone inflation will fall to an average of around 1.3pc next year, according to Capital Economics, compared to 2.1pc in the year to October.
However, it forecasts the UK consumer prices index (CPI) to be stuck at 2.5pc over the same period, before falling to 1.8pc in 2027. UK CPI was 3.6pc in October.
Oxford Economics was more pessimistic, predicting that British inflation would average 2.8pc next year and 2.5pc in 2027.
Britain has become an “outlier” on inflation, economists have warned, after the Prime Minister blamed the Tories for persistent price rises.
Sir Keir Starmer said in Prime Minister’s Questions the “country is still paying the price” after inflation rose to 11.1pc in October 2022 under the Conservatives.
Tory leader Kemi Badenoch said inflation “has nearly doubled” since Labour came to power, as she pointed out that food inflation rose to 4.9pc in October, which is “making life miserable for all those people out there”.
Julian Jessop, an economist at the Institute for Economic Affairs, said today’s price rises were unlike 2022, when the world was gripped by an energy crisis following the outbreak of the Ukraine war.
While UK inflation stood at 3.6pc last month, in the eurozone it was 2.1pc.
FYI, as the PM said at #PMQs today, UK inflation peaked at 11.1% in October 2022.
But as most people will also remember, this was during a global energy crisis – and inflation surged to similar levels in the rest of Europe.
This time, the UK is clearly an outlier… 🤔 pic.twitter.com/APFPBZP7jm
The Prime Minister refused to rule out freezing income tax thresholds as he appeared in the Commons.
Sir Keir Starmer dodged the question when Kemi Badenoch, the leader of the Conservatives, questioned whether there would be a freeze in the upcoming budget.
Freezing thresholds hurts living standards as workers are drawn into paying higher tax rates, rather than those rates rising in line with inflation.
Speaking during Prime Minister’s Questions, Ms Badenoch said: “This is the first Budget to unravel before it’s even been delivered.
“The Chancellor’s cluelessness, I’m afraid, is damaging the economy now.
“The Prime Minister needs to end this shambles.
“So, can he confirm today that he won’t break another promise by freezing income tax thresholds?”
Sir Keir said: “The Budget is one week today and we will lay out our plans.
“I’ve said what we will do in terms of protecting the NHS and public services.
“What we won’t do is inflict austerity on the country as they did. What we won’t do is inflict a borrowing spree like Liz Truss did.”
More than half of businesses said rising wage pressures had become “acute” in the last six months after Rachel Reeves put up the minimum wage, according to Santander.
The lender said 41pc of companies were increasingly concerns about taxation ahead of the Budget, up from 36pc in the spring.
The Chancellor increased the minimum wage by 6.7pc from April, which the chief economist of the Office for National Statistics said today was “being passed through into higher prices”.
Some 59pc of the businesses, which have at least £1m annual turnover, surveyed by the bank expect the Budget next week to dampen UK companies’ confidence in competing internationally.
Frances Haque, chief economist at Santander, said: “The data paints a stark picture of a challenging business landscape, driven by rising taxation, energy prices and labour costs.
“Against low business expectations for the Budget, the Government has a clear opportunity to act decisively and rebuild confidence.
“The key message for ministers is simple: businesses need stability, with a reduction in regulatory requirements and no additional tax burdens, to pursue their international growth ambitions.”
The cost of government borrowing rose despite the latest drop in inflation.
The yield on 10-year UK gilts, a benchmark for what the government promises to pay buyers of its debt, rose as much as four basis points to 4.6pc.
This was despite traders increasing bets on the Bank of England cutting interest rates as inflation fell from 3.8pc to 3.6pc in October. Borrowing costs usually fall if the Bank Rate declines.
Bruna Skarica, chief UK economist at Morgan Stanley, said there were “obvious Budget related risks” to the outlook for interest rate cuts. Chancellor has been accused of pushing up inflation this year with her increases to the national minimum wage.
While a rate cut in December looks likely, she said “what happens thereafter – barring a meaningful continued acceleration in underlying inflation or an outright inflationary Budget, which is not our base case – depends more on high-frequency labour market data than anything else”.
The Chancellor’s decision to raise the minimum wage is causing higher prices for consumers, the Office for National Statistics (ONS) said.
Wholesale inflation increased last month as businesses began to pass on rising costs, the ONS said, following the 6.7pc increase to the National Living Wage in April.
The producer prices index (PPI), which measures factory gate prices, rose from 3.5pc in September to 3.6pc in October, according to the ONS. It can act as a precursor to rises in prices for consumers, measured by CPI inflation.
Grant Fitzner, chief economist at the statistics body, said manufacturers were starting to rebuild their margins after contending with increasing costs of raw materials, which had hit their profitability.
“After several years where those big cost-of-living increases compressed manufacturers’ margins, they are gradually starting to rebuild their margins,” he told BBC Radio 4’s Today programme.
“Another factor is in addition to higher input costs, manufacturers are obviously facing other additions to costs as well.
“The wage increases we saw earlier this year are one of the factors that businesses are reporting is weighing on their profitability.
“And some of that, of course, is being passed through into higher prices.”
The cost of raw materials rose by 0.5% in the year to September 2025, down from a revised rise of 0.7% in the year to September.
Factory gate prices rose by 3.6% in the year to October 2025, up from a revised rise of 3.5% in the year to September.
➡️ https://t.co/lLGDOt3bbn pic.twitter.com/wKky7H9bMa
The housing market has been hit by concerns about tax rises in the Budget, an economist has warned.
Elliott Jordan-Doak of Pantheon Macroeconomics said buyers should prepare for “tax-hike speculation to continue dragging on house prices” in the fourth quarter.
Official figures showed prices rose by 2.6pc in the year to September, down from 3.1pc in August.
Mr Jordan-Doak said: “Rumours of tax increases in the November Budget only became louder over recent months, which is likely to keep some homebuyers on the sidelines as they await clarity over the contents of the Budget.
“Accordingly, we cut our forecast for house price inflation in the fourth quarter to 2.25pc, from 2.5pc before.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “These figures are important, not just because they are the most comprehensive of all the market surveys as cover mortgaged and cash sales but they show house prices are not immune from the Budget and other distractions.
“On the ground, buyers and sellers are naturally concerned about what the Chancellor might do so transactions are more protracted and some prices are being renegotiated. However, we note an underlying determination to proceed, particularly while wage growth is exceeding inflation, which is now hopefully under control as confirmed in today’s figures.”
House prices rose at a slower pace in September, official figures show, ahead of warnings that homeowners will be hit with a “mansion tax” in the Budget.
Average UK house prices increased at an annual pace of 2.6pc, slowing from 3.1pc in the year to August, the Office for National Statistics (ONS) said.
It comes as Rachel Reeves plans to revalue homes in the top three council tax bands in England, with the most expensive 300,000 properties then charged the new tax. Details of the plans were first reported a month after the latest ONS on house prices, indicating the market was already weakening.
Average house prices increased to £293,000 in England, £209,000 in Wales and £194,000 in Scotland in September.
The average house price in Northern Ireland was £193,000 in the third quarter of 2025, up by 7.1pc annually.
ONS head of housing market indices Aimee North said: “UK annual house price inflation slowed in September with the average UK house price now around £272,000.
“Yorkshire and the Humber was the English region with the highest house price inflation while the regions with the lowest annual inflation are in the south of England. London is the only region showing an annual fall again.
“The rental market continues to cool, with UK annual inflation easing for the tenth consecutive month.”
Average UK house prices increased by 2.6%, to £272,000 in the 12 months to September 2025, down from 3.1% in the 12 months to August.
Average UK private rents rose by 5.0%, to £1,360 in the 12 months to October 2025, down from 5.5% in the 12 months to September. pic.twitter.com/1g6qG2dN8D
Inflation at the supermarkets is “probably more or less at its peak” after food and drink prices rose unexpectedly last month.
James Smith, developed markets economist for ING, said October’s rebound was likely to “keep concern alive” among some policymakers at the Bank of England, although he was not expecting this to stop a December rate cut.
Food and non-alcoholic drinks inflation rose from 4.5pc in September to 4.9pc last month, which he said was “red meat” for the more cautious members of the Monetary Policy Committee, which voted to keep rates at 4pc earlier this month.
He said: “They worry that this could fuel a more persistent bout of price pressure, akin to what we saw two or three years ago.”
Mr Smith said evidence from the eurozone, where fresh food inflation is falling, “suggests inflation at the supermarkets is probably more or less at its peak”.
He added: “The bottom line here is that there’s unlikely to be anything in this data that will change the minds of many voters on the Bank of England committee.
“That means the decision continues to hinge on Governor Andrew Bailey, who is somewhere between the two camps – though given he is more sympathetic to the view of the doves, we think he will still tip the balance in favour of a cut in December.”
Budget leaks are “not acceptable”, Rachel Reeves has said, days after it emerged she had U-turned on plans to put up income tax in the Budget.
Borrowing costs surged after it was reported that the Chancellor would instead use a “smorgasbord” approach to raising taxes to balance the books, rather than breaking Labour’s manifesto pledge not to raise taxes on working people.
The Chancellor was asked whether the Government’s mixed messages on tax in the November 26 statement might have contributed to market volatility as investors appeared to be unimpressed with the change in approach.
She told broadcasters: “Leaks are not acceptable.
“But people only have to wait a week now until I deliver my Budget on Wednesday November 26.
“The priorities of that Budget will be to tackle the cost of living, to get NHS waiting lists down and to reduce national debt. Those are the priorities of the British people, and they’ll be my priorities as I go into the Budget next week.”
Labour’s shambolic run-up to next Wednesday’s Budget has left Britain’s economy in disarray.
Months of flip-flopping have caused the property market to grind to a halt and markets to dive, with taxpayers left at a loss as to what to do to protect their money.
The fast-paced rumour mill has been difficult to keep up with – here, you can find out at a glance what’s in and what’s out (well, for now).
The value of the pound edged lower after inflation fell for the first time since May, clearing the path for an interest rate cut next month.
Sterling was down 0.2pc against the dollar at $1.313 and slipped 0.1pc versus the euro to €1.134 as inflation dropped from 3.8pc to 3.6pc last month.
Deutsche Bank chief UK economist Sanjay Raja said the Bank of England “now has a clearer path for a Christmas rate cut”.
Brad Holland of JP Morgan Personal Investing said this month’s decision to keep the Bank Rate on hold at 4pc was “was as close as they come”.
The Monetary Policy Committee was split five votes to four after inflation in September held at 3.8pc, which was better than the expected jump to 4pc.
“While Governor Andrew Bailey has been at pains to say that one good inflation reading is not enough to convince policymakers that inflation is reliably on the way back down, two might just be enough,” said Mr Holland.
“With the latest data following lack lustre growth figures out last week, the calls that action is needed are getting louder by the day. Markets are pricing in an 80pc chance of a 0.25 percentage point interest rate cut in December, and the data is suggesting the time has probably come.”
The rate of inflation in Britain remains “stubbornly high” compared to the eurozone because of last year’s Budget tax rises, a think tank has warned.
Julian Jessop, economics fellow at the Institute of Economic Affairs, said it was “far too soon to sound the all clear” after the UK consumer prices index (CPI) dropped from 3.8pc to 3.6pc.
He warned prices were rising “still well above the Bank of England’s 2pc target” and pointed to “a worryingly large gap” between the rate in Britain and the eurozone, where CPI hit 2.1pc in October.
“This gap can mostly be explained by Government policy choices, including the large increases in labour and other business costs since last Autumn’s Budget,” said Mr Jessop.
“The fall in inflation was at least in line with the Bank of England’s forecasts, removing one barrier to an interest rate cut next month. However, the main reason why interest rates are likely to fall further is the weakness of economic activity, which is likely to be compounded by the announcement of even more tax increases next Wednesday.”
Rachel Reeves raised taxes by £40bn in the Budget last year, including increasing employer National Insurance contributions. Many economists say companies have passed on the rise in costs to consumers.
UK CPI inflation edged down to 3.6% in October. as widely expected, from 3.8%… 👍
But this is still well above the 2% target, and the gap that had opened up against the euro area (especially since the October 2024 Budget) remains worryingly large.
More analysis to follow… pic.twitter.com/Ky1OOZutix
The drop in inflation will be enough to persuade the Bank of England to cut interest rates next month but will still keep policymakers cautious, an economist has said.
Rob Wood, chief UK economist at Pantheon Macroeconomics said a reduction in borrowing costs in December was “nailed-on” after inflation fell from 3.8pc to 3.6pc in October.
He said inflation has “passed its peak” but warned there could be a “lengthy delay until another cut” after next month as “erratic factors” had brought down closely watched services CPI.
He said: “Accommodation services prices tanked 2.2pc month-to-month as the price of a one-night hotel stay fell 7.8pc, far more than in October last year and weaker than our hotel price tracker. Hotel prices look ripe for a rebound in November.
“Communication inflation, meanwhile, was dragged down by broadband charges falling, which will likely be reversed when they are inflation-indexed next April.
“Smartphone handset prices also dropped, perhaps due to early discounting. Within recreation and culture live music prices still have some way to rebound too.”
The FTSE 100 inched up at the start of trading after inflation fell for the first time since May.
The UK’s flagship stock index rose by 0.1pc to 9,558.67 while the domestically focused FTSE 250 gained 0.2pc to 21,475.88.
Rachel Reeves should not use lower inflation as a justification for “stealth tax”, the Liberal Democrats have said.
The party’s Treasury spokesman Daisy Cooper said: “As the cost-of-living crisis rages on, the Chancellor mustn’t look this small gift horse in the mouth.
“Hitting people with a stealth tax at next week’s Budget would prolong the pain of higher taxes for much longer and unfairly pull poorer pensioners and low-income workers into paying tax for the first time.
“We Liberal Democrats are calling for emergency measures to slash people’s energy bills, save our high streets with a VAT cut for hospitality and boost growth in every corner of the UK – funded fairly by taxing the banks.
“The Chancellor must put households and high streets first, and put an end to the most vulnerable from having to choose between heating and eating.”
The Budget could derail hopes for a cut to interest rates next month if it pushes up business costs, an economist has warned.
Money markets indicate there is an 86pc chance that the Bank of England will lower borrowing costs in December, compared to 79pc before official figures showed inflation fell from 3.8pc to 3.6pc in October.
ICAEW economics director Suren Thiru warned Rachel Reeves’s speech would be a “double-edged sword for inflation as while tax rises can be deflationary by dampening demand in the economy, the upward pressure from any rise in business costs risks giving inflation a second wind”.
He said: “Though the conditions for a December interest rate cut are falling into place, the Budget is a last obstacle as rate-setters will want to gauge the effect of the policies announced before authorising another rate reduction.”
The drop in inflation is putting the “conditions in place” for the Bank of England to cut interest rates next month, economists said.
Yael Selfin, chief economist at KPMG UK, said the drop in CPI from 3.8pc to 3.6pc in October showed “further progress on disinflation” which was “positive” for policymakers.
He said the Budget was unlikely to fuel inflation after “growing indications that the Chancellor will look to plug the fiscal gap through higher taxes on households”.
Paul Dales, chief UK economist at Capital Economics, added: “The fall in CPI inflation from 3.8pc in September to 3.6pc in October is the second softish inflation release in a row and could well prompt the Governor of the Bank of England to put on a red suit and white beard and cut interest rates from 4pc to 3.75pc on December 18.”
Inflation fell for the first time in five months in October even as households faced rising energy bills.
October’s decline was in part driven by a technical factor which meant that last year’s big increase in gas and electricity costs fell out of the annual comparison.
In October 2024 the Ofgem energy price cap increased significantly, pushing a typical household energy bill from £1,568 to £1,717, lifting inflation that month.
Although energy bills rose over the last quarter, the price increase was much smaller than in 2024, helping to push down October’s inflation levels.
Utility price inflation eased in October from 9.4pc to 2.2pc, which contributed to the 0.2 percentage point reduction in inflation from 3.8pc to 3.6pc.
However, there are concerns that energy bills will rise further in the coming months.
Labour’s net zero levies will become the main driver of household energy bills next year, overtaking gas prices for the first time.
Cornwall Insight has warned that average household power and gas bills, currently standing at £1,755, will dip by £22 in January only to surge back to £1,808 from April.
The Tories blamed Rachel Reeves’ last Budget for fuelling inflation after the consumer prices index (CPI) fell to 3.6pc in October.
Shadow chancellor Sir Mel Stride said: “Inflation has been above target every single month since Labour’s last Budget, leaving working people worse off.
“Labour’s last Budget hiked borrowing and taxes, stoking the inflation now hitting families. If Labour had any backbone, they would adopt our £47 billion savings plan and our golden economic rule next week to ease inflationary pressures.
“Only the Conservatives have the leader with a backbone, the plan and the team to stabilise the public finances – reducing inflation and delivering a stronger economy.”
After inflation fell from 3.8pc to 3.6pc, Chancellor Rachel Reeves said: “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.”
Rising prices of food and non-alcoholic beverages are a key factor keeping inflation from declining in line with expectations.
Figures from the ONS show that inflation for food and non-alcoholic beverages climbed from 4.5pc in September to 4.9pc in October.
Food inflation has remained stubbornly high as producers warn the government’s packaging tax, climate change and rising input costs are all pushing the price of food higher.
The elevated level of food inflation is a worry for consumers, as many Britons pay close attention to the price of their weekly shop at the supermarket.
Rising food prices stopped inflation falling further than the decline from 3.8pc to 3.6pc, according to the Office for National Statistics (ONS).
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.
“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.”
Inflation declined by less than expected last month in a further strain on households as Rachel Reeves prepares to raise taxes in the Budget.
The consumer prices index (CPI) rate of inflation dropped to 3.6pc in October, according to the Office for National Statistics.
It had been forecast to drop to 3.5pc after being stuck at 3.8pc since July.
The figures come as households brace for the Chancellor to put up taxes to balance the public finances in next week’s Budget.
The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to October 2025, down from 3.8% in September 2025.
Read the article ➡️ https://t.co/Qe6V06RpVI pic.twitter.com/SmDo6VKpZv
Asian markets struggled as investors were nervous ahead of the crucial third quarter earnings update from chip titan Nvidia.
Japan’s Nikkei which has declined more than any other major market for November so far, with a loss of around 7pc in U.S. dollar terms, gave up small gains to trade flat.
Mainland China indexes were steady and Hong Kong shares fell 0.5pc.
Nvidia, which sells the graphics processing units (GPUs) underpinning artificial intelligence, has been at the heart of a rally that has carried stock markets around the world to record highs and lifted any stock with even tangential links to AI.
However, the tech-heavy Nasdaq fell 1.2pc on Tuesday, notching a second straight day of losses. Valuation jitters have knocked it more than 6pc below a record peak hit late in October.
Nvidia reports after market close in the U.S. and is expected to deliver a 56pc jump in revenues to $54.9bn (£41.8bn) in the three months to October, according to data compiled by LSEG.
“It looks like Nvidia’s stock price has been priced for perfection, so GPU demand must continue to grow strongly for many more years for the stock to stay up,” said Wong Kok Hoi, founder and CEO of APS Asset Management in Singapore.
On Tuesday, the S&P 500 index fell 0.8pc to 6,617.32, in its fourth day of losses in a row. The Dow Jones Industrial Average fell 1.1pc, to 46,091.74, while the Nasdaq fell 1.2pc to 22,432.85.
Thanks for joining me. Inflation is forecast to have eased last month, offering some relief to households before the Chancellor is expected to raise taxes in the Budget.
Most economists think the consumer prices index (CPI) rate of inflation will have slowed to 3.5pc in October, from 3.8pc in September, when official figures are published shortly.
Inflation has been stuck at 3.8pc since July.
Elevated food and drink prices have been putting pressure on overall inflation this year, with households seeing steep rises particularly for items such as chocolate, coffee, cheese and eggs.
However, recent data has indicated that the cost of food and non-alcoholic drinks fell between August and September, marking the first monthly decline since May last year. Here is what you need to know.
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