Item 1 of 2 A woman shops in a Waitrose supermarket ahead of Christmas, in London, Britain, December 9, 2025. REUTERS\/Hiba Kola<\/p>\n
[1\/2]<\/b>A woman shops in a Waitrose supermarket ahead of Christmas, in London, Britain, December 9, 2025. REUTERS\/Hiba Kola Purchase Licensing Rights, opens new tab<\/a><\/p>\n LONDON, Dec 17 (Reuters) – British consumer price inflation fell unexpectedly sharply to 3.2% in November, its lowest since March, from 3.6% in October, official figures showed on Wednesday, a day before the Bank of England is widely expected to cut interest rates.<\/p>\n A Reuters poll of economists had shown a median forecast of a fall to 3.5% in November’s annual inflation rate, though the BoE had pencilled in a slightly bigger drop to 3.4%.<\/p>\n Sign up here.<\/a><\/p>\n Sterling dropped by around half a cent against the U.S. dollar after the data came out, which reinforced expectations for looser monetary policy.<\/p>\n Financial markets have been pricing in a more than 90% chance of the BoE cutting rates by a quarter point to 3.75% on Thursday, though many economists have said they see the decision as more finely balanced.<\/p>\n Wednesday’s data showed services price inflation, which the BoE sees as reflecting as a guide to longer-term inflation pressures, fell to 4.4% rather than holding at 4.5% as economists and the BoE had expected.<\/p>\n Food and non-alcoholic beverage inflation dropped to 4.2% from 4.9% in October. The BoE has said it expects this to rise 5.3% in December, the highest in nearly two years.<\/p>\n Core CPI – which excludes more volatile food, alcohol, energy and tobacco prices – also slowed to 3.2% rather than holding at 3.4% as economists had forecast in the Reuters poll.<\/p>\n Last month the BoE’s Monetary Policy Committee voted 5-4 to keep interest rates on hold<\/a>, breaking the quarterly cadence of rate cuts in place since 2024 and economists expect a December rate cut by only a narrow 5-4 margin.Of those members who opposed a cut in November, Governor Andrew Bailey looks most likely to switch votes as he said in minutes of the decision<\/a> that he wanted to see further falls in price pressures “this year” before backing a cut.<\/p>\n British inflation has been higher than in other major advanced economies and in November the central bank forecast it would remain above its 2% target until the second quarter of 2027.<\/p>\n Since then, finance minister Rachel Reeves announced measures in her November 26 budget that will shift climate change costs away from levies on energy bills towards general taxation.<\/p>\n Reporting by David Milliken; Editing by William Schomberg<\/p>\n Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n