UK inflation dropped more than anticipated to 3.2% in November, marking the lowest rate in eight months compared to the 3.6% recorded in October. Experts had forecasted a decrease to 3.5%. The Office for National Statistics (ONS) attributes this decline to reduced food prices.
In November, food inflation decreased from 4.9% in October to 4.2%. Additionally, tobacco prices and women’s clothing costs contributed to the overall decrease in inflation, although raw material expenses for businesses continued to rise.
Core inflation, excluding volatile food and energy costs, also saw a larger-than-expected decline from 3.4% to 3.2%. This update precedes the Bank of England’s upcoming interest rate announcement, with most economists predicting a reduction from 4% to 3.75%.
Chancellor Rachel Reeves expressed satisfaction with the inflation decrease, highlighting initiatives to lower bills, such as freezing rail fares and prescription fees and reducing energy costs. The Bank of England anticipates further declines in inflation next year as a result of these measures.
Inflation serves as an indicator of price fluctuations, with the ONS monitoring changes in a representative “basket of goods” and services. While the headline inflation figure provides an average, individual prices may vary.
The Bank of England aims for 2% inflation and has adjusted interest rates to manage inflation levels. Higher rates can curb spending, reducing demand and subsequently lowering inflation. The base rate currently stands at 4%, down from its peak of 5.25% in August 2023.
Inflation surged to 11.1% in October 2022 due to increased energy and food costs following the Covid pandemic and the Ukraine conflict. After reaching a three-year low of 1.7% in September 2024, inflation began to rise again in October 2024.
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