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UK inflation slows more than expected to 3.9% amid drop in price of petrol, bread and cakes
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UK inflation slows more than expected to 3.9% amid drop in price of petrol, bread and cakes
Inflation lowest since September 2021; pound falls below $1.27 as data adds pressure on Bank of England to lower interest rates
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Inflation in the UK slowed more than expected last month.

The annual inflation rate, measured by the consumer prices index, fell to 3.9% from 4.6% in October, the lowest since 2021, the Office for National Statistics said. Analysts had expected a reading of 4.4%.

Prices fell by 0.2% between October and November compared with a monthly rise of 0.4% a year earlier.

The annual inflation rate was the lowest since September 2021, and down from a recent peak of 11.1% in October 2022, which was the highest rate in more than 40 years, as energy and food prices soared.

The slowdown in inflation was caused by a drop in petrol prices, while secondhand cars, maintenance and repairs, and air fares also dragged the figure down.

The average price of petrol fell by 4.1p a litre between October and November to 151p a litre, down from 163.6p a litre in November 2022. Diesel prices fell by 3.2p a litre this year to 159p, down from 187.9p a litre in November 2022.

Overall, motor fuel prices fell by 10.6% in the year to November, compared with a fall of 7.6% in the year to October.

Prices of a number of bread products, including white and wholemeal sliced loaves, and packs of cakes all fell between October and November, but rose a year ago.

Other smaller downward contributions to the change in the inflation rate came from meat; milk, cheese and eggs; and soft drinks. The only partly offsetting upward effect came from fruit, with prices of strawberries rising this year by more than a year ago.

The ONS chief economist, Grant Fitzner, 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 biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year. Food prices also pulled down inflation, as they rose much more slowly than this time last year.

"There was also a price drop for a range of household goods and the cost of secondhand cars.

"Factory gate prices remain little changed over the past year, while on an annual basis the change in costs that producers pay for raw materials and fuel was negative for the sixth consecutive month."

Sterling slipped below $1.27 “as a kneejerk reaction to the softer-than-expected inflation figures”, according to an analyst.

The pound is trading 0.6% lower against the dollar at $1.2653, and has fallen 0.4% against the euro to €1.1546, as the inflation numbers put pressure on the Bank of England to lower interest rates.

The agenda
• 3pm GMT: US Conference Board consumer confidence for December

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