UK inflation falls to two-year low of 3.9% 

UK inflation has fallen to 3.9% in the year to November, the lowest level seen in two years, according to new figures from the Office for National Statistics.

The rate of inflation was lower than expected after falling from a rate of 4.6% in October, though the ONS said prices were still “substantially above” what they were before the Ukraine invasion. 

According to the ONS, the easing of inflation was in part due to downward effects from motor fuels and, to a lesser extent, second-hand cars, maintenance and repairs, and air fares. 

It comes as the average price of petrol fell by 4.1 pence per litre between October and November to stand at 151.0 pence per litre, down from 163.6 pence per litre in November 2022. 

In addition, slowing prices for food staples such as bread and cereals, where prices fell by 0.8% on the month, also contributed to the slowdown. Milk, cheese and eggs also saw a slowing of prices over the period. 

Commenting on today’s figures, 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.”

He added: “There was also a price drop for a range of household goods and the cost of second-hand 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.” 

Helen Dickinson, CEO of the British Retail Consortium, said: “Inflation continued to fall as fierce competition between retailers helped hold down prices for consumers. With the eighth consecutive fall in food inflation and continued easing in clothing and footwear inflation, retailers are clearly working hard to deliver an affordable Christmas for households everywhere.

“Foods that saw falling prices included some dairy products such as eggs and butter, where lower energy prices fed through to supermarket shelves, while the price of bread and cereals and pork also fell. Meanwhile, sugar prices rose susbstantially due to lower supplies from dry harvests. Washing machines and cookers fell in price thanks to extensive Black Friday sales.”

She added: “There are many risks on the horizon for inflation in 2024. In April, retailers face higher business rates – costing retailers hundreds of millions – new EU border checks, and an increase to the National Living Wage.

“To keep inflation falling, it is vital that Government considers the cumulative impact of their policies – from its proposed deposit return scheme to its new packaging Levy – or the rising cost of doing business will undoubtedly filter back through to inflation.”