In a surprise fall Inflation dropped by 0.2% in November to 3.2% after some food prices stopped rising so fast, except for meat, fish, and vegetables
Economists expected the figure to come in at 3.5%, but this was the lowest since March 2025, even below Bank of England projections.
A big fall in breakfast cereals, olive oil and pasta prices pulled down food inflation to a still high 4.2%, down from last month’s 4.9%, while soft drinks and alcohol were also down, likely part of the pre-Christmas marketing campaigns.
Food and drink prices were down by 0.7% overall, followed by a 0.6% drop in the price of clothes and footwear, and a -0.4% drop in the price of restaurants and hotels.
However, the drop in November was partially offset by a 0.1% rise in post costs, mobile phone charges, and broadband.
But the big concern for consumers is the price of food for the Christmas period.
Lindsay James, investment strategist at Quilter, said: ‘It is the Christmas staples of turkeys, alcohol, and chocolate that consumers will be caring about the most.
‘Thankfully food and drink made the biggest downward contributions. Grocery inflation will be watched closely as it is an important factor in the Bank of England’s interest rate setting given the influence that food prices have on overall inflation expectations. Today’s news could just give it enough cover to cut more than expected.’
The Bank of England decides interest rates on 18 December with a cut of 0.25% widely expected.
Professor Joe Nellis, economic adviser at MHA, said it was ‘almost certain’, that the Bank of England will cut interest rates on the 18 December.
He said: ‘With the UK currently holding the highest interest rates in the G7, it’s crucial for British exports that this begins to reduce. High interest rates strengthen Sterling against other currencies, increasing the price of British exports, and a global environment of trade protectionism only serves to compound this.’
Although the figure is well above the Bank of England’s inflationary target of 2%, Nellis said: ‘For businesses, today’s figure represents a meaningful step toward a more predictable operating environment - this signals that the worst of the cost surge has passed, allowing companies to plan with greater confidence and reduced pricing volatility.’