Inflation has fallen to 3.9%, its lowest level in over two years.
This is due to the reduction in food and petrol prices, and has led to further calls for the Bank of England to begin lowering interest rates in 2024.
The fall in inflation from 4.6% in October to 3.9% in November was well below City analysts’ expectations of 4.3%. Inflation was 11.1% in October 2022.
The ONS said that food inflation dropped to 9.2% from 10.1%, “but prices remain substantially above what they were before the invasion of Ukraine.”
Fuel prices have reduced of late, but there is speculation that these will increase again after BP and other shipping companies like Moller-Maersk, Hapag-Lloyd and MSC have paused sailing through the Red Sea due to attacks on ships from Houthi rebels.
Last week, the Bank of England’s Monetary Policy Committee chose to keep the UK base rate unchanged for their third meeting in a row at 5.25%.
A deputy Governor of the Bank of England, Ben Broadbent, has said that interest rates may need to stay elevated to deal with increases in salaries brought about by increased inflation over the last two years. Sarah Breedon, another deputy, has said that “our job isn’t done”.
She added that “monetary policy still needs to be restrictive for an extended period of time to keep pushing down on inflation and to return it sustainably to target”.