UK inflation dips to 3.2% in November

UK inflation fell more sharply than expected last month, offering some relief to households as the cost of living continued to ease, according to official figures released on Wednesday.

The Consumer Prices Index (CPI) inflation rate dropped to 3.2% in November, down from 3.6% in October, the Office for National Statistics (ONS) said. The reading marks the lowest level since March and represents a bigger decline than economists had forecast, with most expecting inflation to ease only to around 3.5%.

Despite the improvement, inflation remains above the Bank of England’s 2% target, with the data published just a day before the central bank is due to announce its latest interest rate decision.

The ONS said the slowdown was driven primarily by lower food prices, alongside falling costs for alcohol and tobacco and women’s clothing. Food and non-alcoholic beverage inflation fell to 4.2%, down from 4.9% in October, making it the single largest contributor to the decline in the headline rate.

ONS chief economist Grant Fitzner said the easing reflected downward contributions from eight major spending categories, only partially offset by a small upward push from communication costs.

On a monthly basis, prices fell outright, with CPI declining by 0.2% in November, compared with a rise of 0.1% in the same month last year. The broader measure of inflation that includes housing costs, CPIH, rose by 3.5% in the year to November, down from 3.8% in October, and fell by 0.1% month-on-month.

Underlying inflation pressures also showed signs of easing. Core CPI, which strips out volatile items such as energy, food, alcohol and tobacco, slowed to 3.2%, from 3.4% in October. Services inflation remained elevated but edged lower, while goods inflation continued to cool.

The unexpected drop strengthens expectations that the Bank of England may begin easing borrowing costs, after a prolonged period of high interest rates aimed at tackling inflation.

“Lower inflation offers a small seasonal boost for the Chancellor, gently stoking the coals of optimism for businesses and helping move the economy in a more intentional direction,” he said.

However, Randall cautioned that falling inflation alone would not be enough to secure long-term growth.

“With the Budget now in the rear-view mirror, one of the Government’s New Year’s resolutions must be a more intentional approach to supporting businesses with access to finance and long-term investment,” he added. “UK firms have remained resilient throughout 2025, but that resilience cannot be taken for granted.”

While November’s figures suggest inflation is firmly on a downward path, policymakers and households alike will be watching closely to see whether the trend continues into the new year.