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Economists believe a bigger-than-expected fall in inflation last month has “sealed the deal” for the Bank of England to cut interest rates before Christmas.
shops The offering of Black Friday sales helped push inflation to its lowest rate since March.
The consumer price index (CPI) inflation rate fell to 3.2% in November from 3.6% in October. National Statistical Office (ONS) said.
This represents a major decline as most economists were expecting the rate to be 3.5% for the month.
Eat And beverages, as well as alcohol and tobacco, were the biggest factors driving down overall prices.
Economists believe the latest data means the Bank of England will be encouraged to lower interest rates at its next meeting of policymakers on Thursday.
Thomas Pugh, chief economist at RSM UK, said: “This will be further evidence for the Bank of England that the disinflation process is intact and that the deal for a rate cut is sealed tomorrow.
“Inflation is believed to pick up slightly in December as tobacco tariffs go into effect, food prices may creep back up and Black Friday sales end.”
He added that “a large decline in inflation opens the door to another rate cut early next year, especially if the labor market remains weak”.
The bank is expected to reduce rates from 4% to 3.75% on Thursday, providing some relief to borrowers before Christmas.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said an interest rate cut was “beyond doubt” on Thursday after a surprisingly sharp fall in November inflation.
“But most of the inflation surprises in the coming months are likely to subside as it was focused on unregulated or volatile items such as airfares and accommodation services, or possibly driven by the temporary impact of early Black Friday discounts,” he said.
Mr Wood said prices of items including clothing, furniture and games, toys and hobbies fell more than expected during the peak festive selling season, warning that this would “likely reverse” in the coming months.
On a monthly basis, food and non-alcohol beverage prices fell 0.2% in November, with the biggest declines coming from bread and cereals, with dairy, sugar, jams and chocolate also falling.
The annual rate of inflation for the category fell to 4.2% in November from 4.9% in October.
Alcohol and tobacco inflation saw a sharp decline of 4% in the year to November, down from 5.9% in the year to October – the lowest rate in almost three years.
The ONS also said that Black Friday discounts on clothing and shoes helped push prices down 0.3% between October and November, with the biggest fall in women’s clothing.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said shoppers’ “experience in the supermarket will still largely depend on what you buy”.
“Significant annual increases include 27.7% in beef and veal, 14.8% in whole milk and 12.1% in butter,” he said.
“Livestock farmers are still feeling the financial impacts of a poor hay crop as well as increased labor costs during the production and sales process.”
chancellor Rachel Reeves Reducing household bills was a “top priority” after the release of the latest inflation data.
She said: “I know that families across the UK who are worried about bills will welcome this fall in inflation.”
Ms Reeves said her decision to cut average energy bills by £150 in the Budget would “help drive down prices” and result in inflation “falling sharply next year”.
James Murray, Chief Secretary to the Treasury, said: “I know the cost of food is something all families will be thinking about, especially at Christmas.
“We know that global commodity prices are putting pressure on food prices.
,One “Things we can do to bring down food prices include new trade deals.”
The ONS’s preferred measure of inflation, the Consumer Price Index which includes occupiers of housing (CPIH), fell to 3.5% in November from 3.8% in October.
Meanwhile, the retail prices index (RPI) inflation rate slowed to 3.8% from 4.3% in October.