- CPI rose by 3.9% in the year to November – down from 4.6%
- Core inflation also cooled to 5.1% – down from 5.7%
- Food inflation still high at 9.2%
Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK inflation figures:
“Let’s not be churlish, the latest UK inflation numbers deliver a welcome shot in the arm for the UK economy.
“Headline CPI fell to 3.9% in November, less than double the Bank of England’s two percent target, which will give markets faith that interest rates will follow the trajectory they’ve already bought into.
“Looking at rate expectation this morning there’s growing confidence cuts to the base rate could begin as early as March and that by this time next year the economic landscape will look very different – more than one in 10 are now betting rates could fall back to below 4% by next December.
“With around 1.5 million homeowners whose fixed rate mortgages are up for renewal in 2024, these numbers are likely to further increase competition amongst lenders to offer better and better deals.
“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% 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.
“Some families will be dreading this Christmas, feeling guilty about the presents they’ve been able to afford or worried about paying off debts they’ve racked up just to afford the basic festive treats.
“But with meaningful moves on core inflation and cooling inflation in the service sector, which had been something central bankers were watching nervously, it does feel like those sticky tendrils are loosening their grip.
“However, there’s a long way to go to chip off that last 1.9% and it’s impossible not to think about the potential impact the situation in the Red Sea could have on the cost of goods and energy.
“It’s Christmas, and we should take a moment to celebrate how far we’ve come, as long as we don’t forget the miles left to travel.”
