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Inflation rate has fallen slightly.

inflation rates

 Inflation has fallen slightly to 10.7 per cent in November but remains close to a 40-year high as the cost of living crisis weighs on households and businesses. The rate of price rises, as measured by the consumer prices index , fell from a 41-year high of 11.1 per cent in the previous month, when it is thought to have peaked. Economists had forecast a fall to 10.9 per cent. Vehicle fuel prices were 17.2 per cent higher last month than in November 2021, down from 22.2 per cent higher year-on-year in October.


However, this is mainly because of "base effects" or comparing from a higher starting point - the prices have not changed between October and November this year. Inflation was already more than double the Bank of England’s 2 per cent target in November last year. "The Bank, which has implemented eight back-to-back interest rate rises to curb spiralling prices, expects inflation to fall back to its target by 2024. " Rate-setters are expected to increase interest rates yet again from their present level of 3 per cent when they next meet tomorrow.

The Times’ shadow panel of rate-setters has said the Bank should keep up the pace of interest rate rises because inflation is still stubbornly high despite the slowdown in economic activity. Eight of the nine-strong committee of experts, which includes former Bank of England rate-setters and Treasury officials, voted for a 0.75 percentage point rise to 3.75 per cent tomorrow. Only one voted for a 0.5 percentage point rise to 3.5 per cent. Paul Dales, chief UK economist at Capital Economics, said the fall in inflation meant another 0.75 percentage points rise had become less likely.

He said a drop in core inflation from 6.5 per cent to 6.3 per cent was likely to ease the Bank’s fear that inflation is "persistent". The economy grew by 0.5 per cent in October but economists believe the rise is unlikely to stop Britain sinking into recession by the end of the year. The modest return to month-on-month growth in gross domestic product, the main measure of economic output, came after contractions of 0.1 per cent in August and 0.6 per cent in September, when an extra bank holiday for the Queen’s funeral suppressed growth. "Jack Leslie, senior economist at the Resolution Foundation, said the fall in the inflation rate would be of more comfort to policymakers than to households. "

Britain may now be past its inflation peak, which is good news for policy makers at both the Bank and Treasury as they grapple with rising interest rates and public debt. ""But with price rises still massively outstripping pay rises – and Britain’s poorest families facing an inflation rate of over 12 per cent – families are still getting poorer month-on-month, and the cost-of-living crisis will continue to deepen in 2023.
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  1. Jake14 December 2022 at 17:31

    The fact that inflation has fallen slightly isn't felt in prices so regular people don't feel it at all. Prices have gone up way too much on important items and if the Government doesn't find ways to lower them very soon the UK is in for a very, very difficult winter.

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