HOUSEHOLDS have been handed a boost after inflation fell further than expected in November.
The annual rate at which prices rise slowed to 3.9% in the month, down from 4.6% in October, according to the ONS.
Inflation fell to 3.9% in November, down from 4.6% the month before
It comes following peaks of 11.1% last October.
The figures, the lowest since October 2021, are a boost to households which will see the cost of everyday essentials rise at a slower pace.
It comes after the Bank of England held its base rate last week, maintaining it at 5.25%.
The ONS said the biggest driver for inflation slowing was a fall in the price of fuel, food and household goods.
The falling price of items such as bread and secondhand cars contributed while the average cost of petrol dropped by 4.1p a litre to 151p between October and December.
Grant Fitzner, chief economist at the ONS, said: “Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine.”
The latest figures means the Prime Minister Rishi Sunak has further met his promise to half inflation by the end of 2023.
It comes after inflation slowed to 4.6% in October, from 6.7% in September.
Chancellor of the exchequer Jeremy Hunt said: “With inflation more than halved 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.
However, Rachel Reeves, Labour’s shadow chancellor of the Exchequer, added: “Prices are still going up in the shops, household bills are rising and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy.
“Only the Labour Party under Keir Starmer’s leadership has a long-term plan to make working people better off.”
Dean Butler, managing director for Retail Direct at Standard Life, said “times are still tough for many”, but the latest figures would be welcomed by consumers.
He added: “Inflation falling further than expected will take some of the strain off struggling households and some people think it could lead to the Bank of England lowering the base interest rate next year, which would help people with mortgages or unsecured debt, like payday loans or credit cards.”
The latest figures come after the Bank of England kept its base rate unchanged at 5.25% last week in a boost for households.
The Bank raises and drops its rate to control inflation, but high interest rates are generally passed onto mortgage owners.
The Governor of the Bank, Andrew Bailey, stressed there is “still some way to go” to drag inflation down to its 2% target, and has hinted its base rate is likely to remain “restrictive for an extended period of time”.
He said: “We’ve come a long way this year, and successive rate increases have helped bring inflation down from over 10% in January to 4.6% in October, but there is still some way to go.
“We’ll continue to watch the data closely, and take the decisions necessary to get inflation all the way back to 2%.”
There have been calls to drop the base rate after GDP, a measure of growth in the UK economy, shrunk by 0.3% in October.
Economists had expected GDP to contract by just 0.1% but the figures could reignite concern the UK economy is heading for recession.
What slowing inflation means for your money
Inflation is a measure of how much a basket of everyday essentials is rising by, so the lower the figure, the better it is for your pocket.
However, despite inflation falling to 3.9% last month, it still means the price of goods is rising, just at a slower rate.
Karen Barrett, chief executive officer and founder of Unbiased.co.uk, said now could be a good time to opt into a savings bank account.
She added: “Now is the time to fix your savings if you haven’t already, as rates have already fallen from the peak of over 6% that they’ve reached in recent months.
“You can do this with a long-term fixed-rate account, or by investing, but you should ensure you have a long-term strategy that’s appropriate for your situation.”
Meanwhile, she said inflation falling could see rates on mortgages fall further too.
“As the faster inflation continues to fall, the more quickly mortgage rates will follow suit,” she said.
“If you’re on a variable rate mortgage, you’ll see the benefits immediately.
“So if you’re about to apply for a mortgage or lock in a new deal, think carefully about what makes sense to commit to while things are still in flux.”
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