UK inflation has declined more than anticipated, hitting an 8-month low at 3.2% in November. This drop contrasts with the 3.6% recorded in October, marking the lowest annual inflation rate since March. Economists had forecasted a decrease to 3.5%.

The Office for National Statistics (ONS) attributes the decrease primarily to lower food prices. Food inflation dipped from 4.9% in October to 4.2% in November. Tobacco prices and women’s clothing costs also contributed to the decrease, although raw material costs for businesses continued to rise.

Core inflation, excluding volatile food and energy prices, also saw a larger-than-expected decline from 3.4% to 3.2%. The timing of this inflation update precedes the Bank of England’s upcoming interest rate announcement, with most economists predicting a reduction from 4% to 3.75%.

Grant Fitzner, the ONS’s chief economist, explained that the decrease in inflation was driven by lower food prices, which typically rise during this period. Additionally, tobacco prices and women’s clothing costs played a role in pulling down the inflation rate.

Chancellor Rachel Reeves welcomed the inflation decline, emphasizing her commitment to reducing bills for families across the UK. Reeves highlighted measures such as freezing rail fares, cutting prescription fees, and reducing energy bills as part of the strategy to alleviate financial burdens for households.

Inflation serves as a barometer for price fluctuations. When inflation decreases, it signifies that prices are still rising, albeit at a slower pace. The ONS calculates inflation based on a basket of goods and services that represent consumer spending patterns.

The Bank of England aims for a 2% inflation target and has adjusted interest rates to manage inflation levels. Despite interest rate hikes to curb inflation previously, the current base rate stands at 4%, down from its peak of 5.25% in August 2023. Inflation surged to 11.1% in October 2022, driven by increased energy and food costs following the Covid pandemic and the conflict in Ukraine.

Although inflation dropped to 1.7% in September 2024, it began to rise again in October 2024. The trend in inflation rates reflects the economic challenges posed by various factors, including global events and domestic policies.