ALBAWABA – Data released by the United Kingdom’s (UK) Office of National Statistics (ONS) on Wednesday showed UK inflation slowing sharply in November, down to the lowest level in more than two years.
Lower petrol price facilitated the disinflation in Britain as the consumer price index (CPI) fell to 3.9 percent in November, from 4.6 percent the month before, according to Agence France-Presse (AFP).
An OSN statement, as reported by AFP, said UK inflation hit a low last seen in September 2021.
The British government set a goal to slow UK inflation down below five percent in October. A steep fall in UK inflation will lend further support to the embattled Prime Minister Rishi Shunak’s government.
November also marked a sharper slowdown than market expectations of 4.3 percent, as reported by AFP. But the rate is still almost double the Bank of England's official target of 2.0 percent.
None had predicted prices rising by less than 4.2 percent, according to Bloomberg.
UK Inflation is down to the lowest level in two years - AFP
The news comes one week after the BoE froze its key interest rate at a 15-year peak of 5.25 percent. Though the central bank warned UK interest rates will remain elevated to tackle stubbornly high consumer prices.
This would be the first time food price inflation — one of the biggest drivers of Britain’s cost-of-living crisis — is recorded in single digits since June 2022, Bloomberg reported.
Auto fuel prices also contributed to the slowdown, the New York-based news agency reaffirmed, and services inflation dropped to the lowest since January.
Traders responded by ramping up bets that the BOE will cut interest rates in 2024 by 1.43 percent, which would be the most in the current cycle of hikes.
According to Bloomberg, this translates to five quarter-point cuts, fully priced in, with a 70 percent chance of a sixth reduction.
Inflation had surged to a 41-year peak at 11.1 percent in October 2022, stoked by spiking energy prices after Russia’s invasion of Ukraine, which drove UK inflation through the roof.
