According to the Office for National Statistics (ONS), the inflation rate in the United Kingdom slowed to 3.2% in November, coming in below the 3.5% rate anticipated by economists polled by Reuters. The figure marks the lowest level of annual inflation since March and a decrease from October’s 3.6%.
Core inflation—which excludes energy, food, alcohol, and tobacco—also eased to 3.2% on an annual basis, down from 3.4% in the previous month. The main factor behind the decline was a drop in food prices, with notable falls observed for cakes, biscuits, and breakfast cereals.
ONS officials explained that tobacco prices also exerted downward pressure on the inflation rate, having moderated slightly after a substantial increase the previous year, while a decrease in the cost of women’s clothing contributed further to the overall drop. Meanwhile, the annual rise in raw material costs for businesses has continued.
Chancellor Rachel Reeves responded positively to the decline in inflation, expressing that families worried about the cost of living would find relief from the news, though she cautioned that more progress is needed.
The inflation report followed figures earlier in the week showing the U.K. unemployment rate reached 5.1%. This context is expected to prompt strong consideration by the Bank of England for a 25-basis-point reduction in the benchmark rate to 3.75% at its Thursday meeting.
Market observers anticipate a narrow 5-4 vote, with Governor Andrew Bailey likely playing a pivotal role in the decision.
Latest data indicate that growth in the U.K. remains sluggish, with the economy expanding by just 0.1% in the third quarter and signs emerging of a potential rise in unemployment.
Suren Thiru, economics director at the ICAEW, commented that the latest indicators, combined with a series of weak economic data, make an interest rate reduction all but certain.
He said the easing in inflation offers reassurance that the U.K. is transitioning towards a more moderate inflation environment, aided by lower food prices. Thiru also pointed to the ongoing pressure from a weakening labor market and slow economic activity as factors likely to keep inflation on a downward trajectory.
