UK inflation fell by more than economists had expected in November to 3.2%, down from 3.6% in October, strengthening expectations that the Bank of England will cut interest rates at its meeting on Thursday.
Consumer price inflation declined more sharply than forecast, according to figures published on Wednesday by the Office for National Statistics. While economists had widely anticipated a fall, many had expected inflation to come in closer to 3.5%.
Core inflation, which strips out volatile food and energy prices, also eased more than expected, falling from 3.4% to 3.2%. Services inflation, a key gauge for the Bank of England as it assesses domestically generated price pressures, edged down from 4.5% to 4.4%.
The data has made a rate cut by the Bank’s Monetary Policy Committee all but certain, according to analysts. Most expect policymakers to lower the base rate by a quarter of a point from 4% to 3.75%.
Grant Fitzner, chief economist at the ONS, said: “Inflation fell notably in November to its lowest annual rate since March. Lower food prices, which traditionally rise at this time of the year, were the main driver of the fall with decreases seen, particularly for cakes, biscuits, and breakfast cereals.
“Tobacco prices also helped pull the rate down, with prices easing slightly this month after a large rise a year ago. The fall in the price of women’s clothing was another downward driver.
“The increase in the cost of goods leaving factories slowed, driven by lower food inflation, while the annual cost of raw materials for businesses continued to rise.”
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