Inflation fell by 3.9 per cent in the 12 months to November 2023, down from 4.6 per cent in October, according to the Office for National Statistics (ONS).
On a monthly basis, Consumer Prices Index (CPI) fell by 0.2 per cent in November 2023, compared with a rise of 0.4 per cent in November 2022.
The CPI including owner occupiers’ housing costs (CPIH) rose by 4.2 per cent in the 12 months to November 2023, down from 4.7 per cent in October.
On a monthly basis, CPIH fell by 0.1 per cent in November 2023, compared with a rise of 0.4 per cent in November 2022.
The ONS said the largest downward contributions to the monthly change in both CPIH and CPI annual rates came from transport, recreation and culture, and food and non-alcoholic beverages. However, food inflation was still high at 9.2 per cent.
Nicholas Hyett, investment analyst at Wealth Club, said: “The fall in headline inflation to 3.9 per cent marks a dramatic and unexpected fall. While we’re still seeing prices rise faster than the US and Europe, the UK is no longer the outlier it once was.
“Lower rates of food and drink inflation, cheaper games and toys and lower fuel costs will have been a welcome Christmas miracle for cash-strapped families ahead of the festive period, and retailers will welcome a flusher consumer too.
“However, like any Christmas miracle the main character’s actions are only passingly relevant to the outcome. The fall has been driven largely by lower oil and gas and food prices, with core inflation still high at 5.1 per cent. Commodity prices aren’t something governments or even central banks have much control over – and until core inflation (reflecting things like domestic pay rises) is back closer to target we suspect the Bank of England will remain cautious on interest rates.”
Danni Hewson, head of financial analysis at AJ Bell, said: “Falling prices at the pump and slowing food inflation played a big part in delivering this bigger than expected drop in the headline number, though food inflation still stands at a whopping 9.2 per cent and that means for most Brits their budgets are still feeling significant strain.
“It remains vital no one forgets that whilst inflation is falling it doesn’t mean prices are falling, and that not everyone has had an inflation busting wage increase over the past couple of years.”
