Britain’s two-year cost of living crisis showed further signs of easing in November as the annual inflation rate dipped far more sharply than expected to 3.9% – its lowest in more than two years.
The Office for National Statistics (ONS) said inflation as measured by the consumer prices index had dropped sharply for a second month from 4.6% in the year to October – continuing the recent downward trend.
Cheaper fuel was the main reason for the dip in inflation below 4% last month but the ONS said food prices were also rising more slowly than a year ago. The decline does not mean that prices are going down, only that they are rising more slowly.
Although the figure remains at almost double the government’s 2% target, the latest fall means Rishi Sunak can say he has met his target of halving inflation in the course of 2023.
City forecasters had not expected a repeat of October’s sharp drop in inflation from 6.7%, and had pencilled in a decline to 4.4% in November. Core inflation – which strips out fuel, food, alcohol and tobacco – also fell sharply last month, dropping from 5.7% to 5.1%.
The chancellor, Jeremy Hunt, said: “With inflation more than halved we are starting to remove inflationary pressures from the economy. But many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures.”
The ONS chief economist, Grant Fitzner, said: “Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine.
“The biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year. Food prices also pulled down inflation, as they rose much more slowly than this time last year.
“There was also a price drop for a range of household goods and the cost of secondhand cars.”
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Food prices rose by 0.3% last month compared with a rise of 1.1% in November 2022. As a result, food price inflation stood at 9.2%, down from 10.1% in October.
Despite coming down from a peak of 11.1% in October 2022, the Bank of England has said the inflation rate is still too high for it to contemplate cutting interest rates. Threadneedle Street’s monetary policy committee responded to the highest inflation in four decades by raising the cost of borrowing at 14 successive meetings between December 2021 and August this year.
