Inflation Rate Brings A Nice Surprise

BRITAIN’S annual inflation rate dipped in November to 3.9 per cent, down from 4.6 per cent in October.

Based on the consumer prices index (CPI), November continued the downward trend with the lowest rate in two years.

Cheaper fuel was the main reason for the fall, although last month’s food prices also rose more slowly than they did in November 2022, the Office for National Statistics (ONS) explained. The pronounced drop did not mean that prices were going down, but that they had risen more slowly, chief ONS economist Grant Fitzner said.

“Prices remain substantially above what they were before the Ukraine invasion,” he added.

Food prices increased by 0.3 per cent last month, down from 1.1 per cent in November 2022, with food price inflation now at 9.2 per cent compared with 10.1 per cent in October.

Although inflation has descended from its 11.1 per cent October 2022 peak, the Bank of England insisted that the inflation rate was still too high for an interest rate reduction.

Nevertheless, City analysts predicted that the steeper-than-expected fall in inflation encouraged conjecture that the Bank of England could begin cutting interest rates next year, probably in May, following successive increases between December 2021 and August 2023.

Although the November figures are practically double the government’s 2 per cent inflation target, Jeremy Hunt told a radio interviewer that Rishi Sunak had “more than delivered” on his pledge to halve inflation this year.  The Chancellor also said that lower inflation “raised the prospect of improved living standards.”