Bigger than expected fall in inflation

Slowed price rises in food, transport and recreation, along with price drops in raw materials, led to the surprise fall of CPI to 3.9%.

The rate of price rises significantly slowed again in November to another two year low, official figures show.

Inflation stood at 3.9% last month, according to the Office for National Statistics (ONS), a dramatic fall from the 4.6% recorded a month earlier as price increases slowed in transport, recreation and culture, and food.

Economists polled by Reuters had forecast a fall to 4.4%.

But the decrease is less steep than the drop from September when the consumer price index (CPI) measure of inflation tumbled from 6.7%.

Prices for some goods fell, the ONS said.

The cost of raw materials dropped 2.6%, and goods leaving factories fell by 0.2%.

The figures published on Wednesday morning is still just under double the 2% inflation target aimed for by policymakers at the Bank of England. Such highs are why the central bank said it is too early to talk about cutting interest rates which have made the cost of borrowing more expensive in an attempt to bring inflation down.

Chancellor Jeremy Hunt said, “we are starting to remove inflationary pressures from the economy”.

“Alongside the business tax cuts announced in the Autumn Statement this means we are back on the path to healthy, sustainable growth. But many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures.”

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