Downward Contributions in Nearly all Categories Bring CPI to 3.9%

Main points

• Annual consumer price inflation was 3.9 per cent in November, the lowest level since September 2021, decreasing from 4.6 per cent in October. This figure reflects downward contributions from almost all items, particularly transport, recreation and culture, and food and non-alcoholic beverages. This easing of price pressures was partially offset by price increases in housing and household services, and restaurants and hotels.
• Food inflation fell to an annual rate of 9.2 per cent, the lowest level since May 2022, and down from 10.1 per in October. However, the fact that it remains so elevated is concerning since there is no government support to help households (especially lower income households, who spend a greater part of their incomes on food) offset this cost.
• Energy prices ‘dropping out’ of the CPI basket calculation have been the main driver of the recent falls in the CPI rate. In November, decreases in the petrol and diesel prices led overall motor fuels prices to fall by 10.6 per cent. In turn, this led to price decreases in sectors that rely on motor fuels as primary inputs. The transport sector, for instance, saw its CPI inflation rate fall by 1.5 per cent in November, contributing 0.27 percentage points in the overall decline in the CPI rate between October and November.

“Today’s data indicate that annual CPI inflation was 3.9 per cent in November, down from 4.6 per cent in October, driven by downward contributions from almost all items, particularly transport, recreation and culture, and food and non-alcoholic beverages. Core CPI inflation fell from 5.7 per cent in October to 5.1 per cent in November; services inflation fell from 6.6 per cent in October to 6.3 per cent in November; and NIESR’s measure of trimmed-mean inflation fell from 6.5 per cent in October to 5.7 per cent in November. Though it is good news that these measures are easing significantly, they indicate that underlying inflationary pressures remain elevated (indeed above the headline CPI rate) and may therefore continue to generate persistence in inflation. So, while today’s data represent a positive surprise, there is still some way to go before inflation reaches the Bank of England’s target, which, as set by the government, is to achieve a 2 per cent inflation rate.”

Paula Bejarano Carbo
Associate Economist, NIESR

Read our blog on what inflation is and how it is calculated