Massive relief for Rachel Reeves as UK inflation drops to 3.2% | Personal Finance | Finance
rate inflation It fell to 3.2%, making a move to ease the pressure on prices. Rachel Reeves. Economists had expected inflation to ease in November after a decline in food costs offset a rise in hotel prices.
According to the Office for National Statistics, the Consumer Price Index (CPI) stood at 3.2% in the 12 months to November, down from 3.6% in October. ONS Chief Economist Grant Fitzner said: “Inflation fell markedly in November to its lowest annual rate since March. Lower food prices“Prices, which traditionally rise at this time of year, were the main driver of the decline, with declines seen particularly in cakes, biscuits and breakfast cereals.”
Mr. Fitzner added that tobacco prices also helped push the rate down, as prices fell slightly after a big increase a year ago. He added: “The decline in women’s clothing prices was another downward factor.
“While the increase in the cost of goods leaving factories slowed down due to the impact of low food inflation, the annual cost of raw materials for businesses continued to increase.”
Simply Asset Finance Chief Executive Mike Randall said low inflation had offered a small seasonal boost for the Chancellor, slightly reigniting optimism for businesses and helping the economy move in a more informed direction.
He added: “But low inflation alone cannot sustain this trend. Budget “It now appears in the rearview mirror that one of the Government’s New Year’s resolutions should be a more deliberate approach to supporting businesses with access to finance and long-term investment.”
Kris Brewster, Director of Retail Banking at LHV Bank, said: “Let’s hope today’s decline, following the decline in October, shows that the Bank of England is finally getting inflation under control.
“Missing the inflation target by more than a year is not a technicality. It is a real cost felt by hard-working people whose wages have yet to catch up.”
Mr Brewster said many people were still struggling with the cost of daily living and although inflation had trended downward since a high of 11% in October 2022, it was still far from that pace.
A falling inflation rate does not mean that prices are falling; This means prices are increasing at a slower rate.
In a statement, the Chancellor said: “I know families in England who are worried about their bills will welcome this reduction in inflation.
“Reducing bills is my top priority, which is why I froze rail charges and prescription charges and cut average energy bills by £150 in the Budget this year. Bank of England “I agree that this will help reduce prices and as a result we expect inflation to fall faster next year.”
The National Institute for Economic and Social Research said today’s figures showed inflation had fallen in consecutive months for the first time since March, putting it on a downward path.
NIESR added in a statement: “Although still above target, this trend means the Bank of England is likely to cut the Bank Rate tomorrow, although a decision is expected soon.”
Analysts expected the Bank’s next interest rate decision to be on a knife edge, but today’s inflation figure could tip the balance further in favor of a rate cut as Threadneedle Street continues its bid to push inflation down towards its 2% target.
Bestinvest by Evelyn Partners Personal Finance Analyst Alice Haine said the latest readings were consistent with the BoE’s belief that inflation had already peaked.
He added that the Bank is expected to continue a 25 basis point cut in the Bank Rate after the UK economy showed signs of tension with a 0.1% contraction in October.
Ms Haine said: “With England Unemployment climbs to nearly five-year high “The case for a rate cut has strengthened significantly as the UK’s job market falters ahead of the Budget, with a 5.1% rise in the three months to October as wage growth declines and redundancies rise.”
