UK inflation fell more than expected in November, easing pressure on household budgets and increasing expectations that interest rates will be cut this week.
Official figures show that the Consumer Prices Index (CPI) dropped to 3.2% last month, down from 3.6% in October. Economists had predicted a smaller fall to 3.5%. The latest figure marks the lowest annual inflation rate since March.
According to the Office for National Statistics, the main driver was a slowdown in food prices, which typically rise at this time of year. Instead, prices for items such as cakes, biscuits and breakfast cereals fell. Tobacco prices also declined slightly after a sharp rise a year earlier, while women’s clothing prices provided a further downward push.
Food and drink inflation eased from 4.9% in October to 4.2% in November. Core inflation, which excludes volatile items such as food and energy and is closely watched by policymakers, also cooled, falling from 3.4% to 3.2%.
The weaker inflation reading has strengthened the case for an interest-rate cut, with financial markets already pricing in a high probability of a quarter-point reduction. Signs of slowing economic growth have reinforced expectations, with a softening jobs market and data showing the economy unexpectedly contracted in October.
The Chancellor has made tackling the cost of living a central priority, with recent measures aimed at reducing pressure on household bills. Ministers believe these steps could shave up to half a percentage point off inflation next year.
Economists also point to Black Friday and early Christmas discounts as a factor, with retailers cutting prices on food, clothing, footwear and household goods to support demand.
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