UK inflation fell to 3.2% in November, below forecasts, strengthening expectations for an imminent Bank of England interest rate cut.
LONDON: Britain’s annual inflation rate slowed more than expected in November, cementing expectations of a Bank of England interest rate cut this week.
Official data showed the Consumer Prices Index dropped to 3.2% from 3.6% in October.
The analysts’ consensus forecast had been for inflation of 3.5%.
The Bank of England is widely expected to cut its main interest rate by a quarter point to 3.75% on Thursday.
The UK economy is struggling to grow and unemployment is rising.
“Inflation fell notably in November to its lowest annual rate since March,” 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 with decreases seen particularly for cakes, biscuits and breakfast cereals.”
Finance minister Rachel Reeves welcomed the data. She and Prime Minister Keir Starmer have faced pressure over Britain’s weak economic growth.
“Getting bills down is my top priority,” Reeves said in a statement.
She recently announced measures to trim energy and rail ticket prices in the Labour government’s annual budget.
The pound accelerated losses against the dollar following the data as markets priced in a rate cut.
Paul Dales, chief UK economist at Capital Economics, said the fall “will surely be enough to prompt the governor of the Bank of England (Andrew Bailey) to reach into his big bag tomorrow and give borrowers the early Christmas present of a cut in interest rates”.
He added that the BoE was on course to cut borrowing costs further next year. UK inflation is set to move closer to the central bank’s 2% target.
