Official statistics show that UK price rises fell significantly in November to another two-year low. According to the Office for National Statistics (ONS), inflation fell to 3.9% last month, a significant fall from the 4.6% in October. This is due to a decline in cost increases across transport, recreation, culture, and food. The biggest contributory factor being a steady decrease in fuel costs. According to a poll commissioned by Reuters, economists had forecast a fall to 4.4%. However, the decrease is less steep than the drop from September when the consumer price index (CPI) measure of inflation tumbled from 6.7%. Overall prices are still rising, just at a more reduced pace. The ONS noted that some prices have fallen. Raw materials dropped by 2.6%, transport costs reduced by 1.4% and goods leaving factories fell by 0.2%.
The figures published on Wednesday morning are still just under double the 2% inflation target set by the Bank of England. Overall the central bank said it is too early to talk about cutting interest rates which have made the cost of borrowing more expensive in an attempt to bring inflation down. More data is required before such a commitment can be made Yet, despite falling far short of the Bank's target figures, inflation is at a more than two-year low. September 2021 previously saw a comparable rate. Overall, the Bank of England still feels that the numbers indicate the scale of the cost of living crisis in recent months and feels that fiscal prudence is still required before the nation reaches a more equitable financial climate.
The drop in core inflation, from 5.7% to 5.1%, will be of interest to the members of the Bank's Monetary Policy Committee, who decide interest rates. The latest data means the UK is in a similar position to similar-sized G7 economies and has the same inflation rate as France, although higher rates than Germany and the United States. Chancellor Jeremy Hunt said: “We are starting to remove inflationary pressures from the economy”. He is currently hoping that the business tax cuts announced in the Autumn Statement, will put the country back on the path to sustainable growth. However, the cost of living crisis is still impacting many families, with high prices. Hence the Chancellor has stated that he will continue to prioritise measures that help with such pressures.
Summary:
The UK inflation rate has fallen to 3.9% in November, figures from the Office for National Statistics show.
This is a bigger reduction than expected and inflation is now the lowest it's been in more than two years. It puts the UK on level pegging with France.
Chancellor Jeremy Hunt says that the UK is "back on the path to healthy, sustainable growth".
A big factor in the drop was a fall in the average prices for both petrol and diesel.
Slowing price rises for food, including staples such as pasta, milk and butter were also contributory factors.
Inflation measures the rate at which prices are rising. It has been slowing down since record highs towards the end of 2022.
While inflation is now well below its peak in 2022, it is still almost double the Bank of England's 2% target.