UK inflation fell more sharply than expected in November, dropping to 3.2% from 3.6% the previous month, its lowest level since March. The decline, driven by falling food prices and Black Friday discounts, has bolstered expectations that the Bank of England will cut interest rates on Thursday.
According to the Office for National Statistics, food and drink price inflation slowed from 4.9% to 4.2%, with notable decreases in cakes, biscuits, and breakfast cereals. ONS chief economist Grant Fitzner said: “Lower food prices, which traditionally rise at this time of the year, were the main driver of the fall.” Tobacco prices and women’s clothing also contributed to the drop.
Financial markets are pricing in more than a 90% chance of a quarter-point cut to the base rate, currently at 4%. The pound fell 0.7% against the dollar, and government borrowing costs declined. Core inflation, which excludes volatile items like energy and food, also cooled from 3.4% to 3.2%, further strengthening the case for a rate cut.
Chancellor Rachel Reeves welcomed the fall, stating: “Getting bills down is my top priority.” However, the inflation rate remains well above the 2% target, and some economists caution that persistent pressures could limit further cuts in 2026. Shadow chancellor Mel Stride noted that “prices are still rising at well above the target rate,” while campaigners at the Joseph Rowntree Foundation warned that 7 million households struggle to afford essentials.
