Price rises slowed last month but the cost of living remains close to its highest level for 40 years. UK inflation, the rate at which prices rise, fell to 10.7% in the year to November from 11.1% in October.
The drop was due to petrol prices falling from record highs, but was offset by price rises for alcohol in restaurants, cafes and pubs.
Some analysts said November’s lower figure showed that inflation has peaked and price increases will slow down.
Inflation is a measure of the cost of living and to calculate it, the Office for National Statistics (ONS) keeps track of the prices of hundreds of everyday items, known as a “basket of goods”.
Lower inflation does not mean the prices of goods will go down, it just means they stop rising as quickly.
The main driver behind the easing in the inflation rate between October and November came from the fall in price for petrol and diesel.
However, the ONS said average fuel prices were still way above what they were last year. In November, petrol and diesel prices stood at 163.6p and 187.9p per litre respectively, compared with 145.8p and 149.6p per litre in November 2021.
Meanwhile food prices continued to rise, with annual food inflation hitting 16.5% – the highest rate for 45 years – up from 16.4% in October.
NEWS ANALYSIS
The dip in the overall rate of inflation in the year to November should be the start of a few months of falls. October’s four-decade high now looks to have been the peak. But inflation will remain very high for months to come.
Even in the latest figures, food price rises reached new 45-year highs of 16.5%, as is evident in the shops. But its not just petrol prices contributing to a slowing of the inflation rate. Other commodity prices and transport costs are on their way down. The fall in the price of used cars – one of the first indicators of the inflationary pressures last summer – is now accelerating.
While households still face an historic squeeze from the cost of living, the Bank of England may feel able to slow up on rises in interest rates, especially given expectations a recession has already started.
In the absence of further shocks to the world economy, it may be that the very worst is now behind us.
The Money Advice Trust, a charity that runs the National Debtline, said that households were facing a “tough winter” despite the overall inflation rate falling.
“It’s clear the challenge of affording essential costs, including food and energy bills, isn’t going away anytime soon and for many is only set to get harder with the cold weather now well and truly with us,” said chief executive Joanna Elson.
She said government support for things such as energy bills would provide some relief, but warned it does “not get close to matching the scale of the challenge many households are already facing”.
Chancellor Jeremy Hunt said getting inflation down was his “top priority” which is why the government was “holding down energy bills this winter… and implementing a plan to help halve inflation next year”.
“I know it is tough for many right now, but it is vital that we take the tough decisions needed to tackle inflation – the number one enemy that makes everyone poorer,” he said.
But shadow chancellor Rachel Reeves said: “The question people across Britain will be asking themselves this morning is: ‘Do I and my family feel better off under the Tories?’ The answer will be no.”
Leading economists including Paul Dales of Capital Economics and Samuel Tombs of Pantheon Macroeconomics said that November’s figure showed inflation had UK peaked and price rises would continue to slow down.
But Grant Fitzner, chief economist of the ONS, told the BBC’s Today said he believe it was “too early” to tell.
“We’ve only one fall from a 40-year high so let’s wait a few months and see how it goes,” he said.
