Last month’s surprise decrease in UK inflation was mostly caused by a decline in fuel prices.
From 4.6% in October to 3.9% in November, prices increased.
Another factor contributing to the decline was the gradual increase in the prices of household products and food, especially basics like pasta, milk, and butter.
Even if inflation has significantly decreased since 2022, it is still about twice the Bank of England’s target of 2%.
Although prices are rising more slowly, falling inflation does not imply that most products and services are less expensive.
The Office for National Statistics’ (ONS) chief economist, Grant Fitzner, stated that although inflation in the UK has decreased once more, “prices remain substantially above” what they were prior to Russia’s invasion of Ukraine.
Following the start of the conflict, there had a significant impact on the world oil market, which caused record high prices for gasoline and diesel in 2022.
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However, the RAC motoring club reports that oil prices have returned to normal and that pump costs are currently at their lowest point in almost two years.
The average cost of a litre of unleaded is approximately £1.43, a price last observed at UK forecourts in October 2021.
The ONS also reported that, with the price of bread and grains declining, food price inflation slowed down in November.
Food costs in the UK are still 9% more than they were a year ago, nevertheless.
Even though the crisis caused by rising costs of living is beginning to pass, many households won’t feel much better off, particularly when it comes to energy and loan payments.
Even if the cost of gas and electricity is lower than it was a year ago, most people will actually have to pay more for energy this winter than they did in 2022 since the government is no longer paying for their bills.
In the meantime, in an effort to halt price increases, the Bank of England has raised interest rates 14 times since December 2021. With rates reaching a 15-year high of 5.25%, mortgage borrowing costs have increased, but savings rates have also increased.
Despite slowing economic growth, Bank Governor Andrew Bailey has said that rates won’t be lowered anytime soon.
The UK is “back on the path to healthy, sustainable [economic] growth,” according to Chancellor Jeremy Hunt, but the government will “continue to prioritise measures that help with cost of living pressures.”
“Prices are going up in the shops, household bills are going up, and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy,” stated Labour’s shadow chancellor, Rachel Reeves.
Although the UK’s inflation rate is still higher than that of the US, France, and Germany, the difference is closing.
The UK’s November decline to 3.9% puts it level with France, but higher than the US’s 2.1% and the EU’s 3.1% average rates.
