Lower clothing and food prices help inflation fall by more than expected
Falls in food, alcohol, and clothing prices last month helped drive inflation to its lowest level in eight months in November.
The inflation rate fell to 3.2% from 3.6%, a larger fall than analysts expected.
Lower food prices were the main driver of the fall, “with decreases seen particularly for cakes, biscuits, and breakfast cereals”, according to Office for National Statistics (ONS) chief economist Grant Fitzner.
It comes ahead of the Bank of England’s decision on interest rates on Thursday, with a cut widely expected.
The fall in inflation will foster hope that inflation has peaked, with this possibly paving the way for further interest rate cuts next year.
Other items which also pushed down inflation were the cost of tobacco, restaurant meals and hotel stays, furniture, and transport.
Prices are still rising on average across the economy, but there were decreases in some items between October and November.
Food prices, which were the biggest driver of the lower inflation figure, fell month on month – bucking a trend for normally rising at this time of the year.
Between October and November, food prices fell by 0.2 of a percentage point, and increased 4.2% in the year to November – a decrease on the 4.9% in the year to November.
Chancellor Rachel Reeves said she knew that families across Britain “will welcome this fall in inflation”.
“Getting bills down is my top priority. That is why I froze rail fares and prescription fees and cut £150 off average energy bills at the Budget this year,” she said.
Inflation in the UK is a measure of the Consumer Prices Index, which is a basket of goods and services selected by the ONS that includes things like bread, fruit, and different items of clothing.
Reacting to the inflation figure, chief UK economist with Capital Economics, Paul Dales, said it was “particularly good news” that the rate of price rises had been “dragged down by the fun things that we all want to indulge in around this time of year”.
He added that clothing and footwear prices could also rebound after Black Friday discounts drop away, but that the overall picture “shows that disinflation is happening faster than expected”.
Black Friday discounts were heavier this year, which helped average clothing and footwear prices stay low in November, Sarah Coles, head of personal finance with Hargreaves Lansdown said.
“Sluggish sales persuaded retailers that they had to work harder to get people through the doors, so discounts were heavier this year – particularly for women’s clothing and shoes.”
Danni Hewson, AJ Bell head of financial analysis, said: “As Christmas gifts go, this is a most welcome one.
“It’s the time of year when people put a few more things in their supermarket trolley, so news that food and alcohol inflation has fallen will be a boon for cash-strapped families.”
She added that it must be noted that “falling inflation doesn’t mean the cost of living is getting cheaper” and that “many households are still reeling from the impact of the mega price hikes we’ve endured over the past few years”.