\n<\/p>\n
UK inflation fell by more than expected in November to the lowest level in eight months amid a slowdown in food prices, clearing the way for the Bank of England to cut interest rates on Thursday.<\/p>\n
In a crunch week for the economy, the Office for National Statistics said the rate as measured by the consumer prices index eased to 3.2% last month from a reading of 3.6% in October. City economists had forecast a modest drop to 3.5%.<\/p>\n
Strengthening the case for the Bank to cut borrowing costs for a sixth time, the slowdown in the headline rate to the lowest level since March was fuelled by falling pre-Christmas food prices and Black Friday discounts.<\/p>\n
Grant Fitzner, the ONS chief economist, said: \u201cLower food prices, which traditionally rise at this time of the year, were the main driver of the fall, with decreases seen particularly for cakes, biscuits, and breakfast cereals.<\/p>\n
\u201cTobacco prices also helped pull the rate down, with prices easing slightly this month after a large rise a year ago. The fall in the price of women\u2019s clothing was another downward driver.\u201d<\/p>\n
Analysts said a cut in the Bank\u2019s base rate was \u201call-but nailed on\u201d before its policymakers meeting on Thursday, as faltering economic growth and rising levels of unemployment bear down on inflationary pressures.<\/p>\n
\u201cNovember\u2019s drop in UK inflation is just the latest sign that price pressures are abating and that the Bank of England has more work to do. We expect a rate cut on Thursday and two more next year,\u201d said James Smith, the developed markets economist at ING.<\/p>\n
The pound fell by 0.7% against the dollar on the currency markets. Trading in financial markets reflects a more than 90% chance of a quarter-point cut in the base rate from the current level of 4%. Government borrowing costs also fell.<\/p>\n
The latest reading showed inflation in food and drink prices slowed from 4.9% in October to 4.2%, with the cost of products such as cakes, biscuits and breakfast cereals falling this year after rising a year ago.<\/p>\n
Kris Hamer, the director of insight at the British Retail Consortium, said extensive discounting across Black Friday month had contributed to the decline, alongside big pre-Christmas promotions. \u201cAs a result, there were deals to be had, with bigger discounts seen for some meat products such as pork, lamb and chicken.\u201d<\/p>\n
The price of some food products tumbled sharply compared with a year earlier, including a 16.2% drop in olive oil, a 6.1% decline in flours and other cereals, and a 4.2% drop in the price of pasta products and couscous.<\/p>\n
Further strengthening the case for a rate cut, core inflation \u2013 which excludes volatile items including energy and food, and is closely monitored by the Bank \u2013 also cooled from 3.4% to 3.2%.<\/p>\n
The chancellor, Rachel Reeves, made tackling the cost of living a major target of last month\u2019s autumn budget, alongside \u00a326bn of tax increases to help repair the public finances and fund the end of the two-child benefit cap.<\/p>\n
The Bank has said it expects the chancellor\u2019s measures \u2013 including relief on energy bills, prescription charges and fuel duty \u2013 could cut headline inflation by as much as half a percentage point next year.<\/p>\n
\u201cGetting bills down is my top priority,\u201d Reeves said. \u201cI know families across Britain who are worried about bills will welcome this fall in inflation.\u201d<\/p>\n
Despite the slowdown in November, the UK\u2019s headline inflation rate remains significantly above the 2% target set by the government. Some economists warned that the UK still faced pressures from inflation that could limit the Bank from cutting interest rates much further in 2026.<\/p>\n
Mel Stride, the shadow chancellor, said: \u201cWhile a fall in inflation is welcome, prices are still rising at well above the target rate, which will be deeply concerning for families.\u201d<\/p>\n
Campaigners said consumer prices remained significantly higher than in 2021, before the inflation shock took hold. Chris Belfield, the chief economist at the Joseph Rowntree Foundation poverty charity, said 7 million households were heading into Christmas unable to afford essential items.<\/p>\n
\u201cMeanwhile, more people are looking for work with unemployment figures up to pre-pandemic levels and real earnings are barely growing.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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