UK inflation falls from 41-year high as fuel price surge eases

LONDON — U.K. inflation came in slightly below expectations at 10.7% in November, as cooling fuel prices helped ease price pressures, though high food and energy prices continued to squeeze households and businesses.

Economists polled by Reuters had projected an annual increase in the consumer price index of 10.9%, after October saw an unexpected climb to a 41-year high of 11.1%. On a monthly basis, November’s increase was 0.4%, down from 2% in October and below a consensus estimate of 0.6%.

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The Office for National Statistics said the largest upward contributions came from “housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.”

The largest downward contributions over the month came from “transport, particularly motor fuels, with rising prices in restaurants, cafes and pubs making the largest, partially offsetting, upward contribution.”

The Bank of England will announce its next monetary policy move on Thursday, and is widely expected to raise interest rates by 50 basis points as it juggles sky-high inflation and an economy that policymakers say is already in its longest recession on record.

The country faces widespread industrial action over the Christmas period as workers strike to demand pay rises closer to the rate of inflation and better working conditions.

The independent Office for Budget Responsibility projected that the U.K. will suffer its largest fall in living standards since records began as real household income is expected to fall by 4.3% in 2022-23.

U.K. Finance Minister Jeremy Hunt last month announced a sweeping £55 billion ($68 billion) fiscal plan, including a slew of tax rises and spending cuts, in an attempt to plug a substantial hole in the country’s public finances.

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