British inflation “slows slightly” to 10.7%; but Hunt warns ‘wrong choices’ would prolong pain – business live | Company

UK households face a steep fall in living standards due to high inflation, warns Andrew Tully, technical director at insurance company Canada Life:

“,”elementId”:”3dd48e72-2c7b-403e-bb9e-02be02796355″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Tully explains:

“,”elementId”:”22588d72-a7dc-4952-b2ce-b0a115d61dda”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

\n

“While the headline numbers grab the news, the reality is underlying personal inflation rates for the things we buy every week, like food and energy, are running way above these headline figures, and our wages and pensions are simply not keeping up.

\n

“We are heading into a period where our living standards are predicted to fall by the largest amount since records began, and today’s inflation numbers will offer little comfort. As an example of the price pressures we face, four pints of milk cost £1.17 in September 2021 but that had increased rapidly to £1.52 by Sept 22. However, even as inflation slows, the price of that milk is likely to stay high, with the price simply not rising as fast as previously. The official economic forecasts are predicting a deep and protracted fall in living standards while we wait for our incomes to catch up.

\n

“For retirees on fixed incomes, the confirmation of a double-digit rise in the state pension from next April is helpful but is likely to offer little comfort in the winter months as the prices pensioners pay for everyday goods is still much higher.”

\n

The latest data leaves each UK household needing to find £2679 extra a year to maintain living standards, or the UK collectively £74.5 billion.

\n

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The drop in the UK’s CPI rate last month may suggest that inflation has peaked.

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But, inflation still remains at a “precariously high rate”, says Suren Thiru, economics director at ICAEW (Institute of Chartered Accountants in England and Wales) and is “having a real impact on people and businesses”.

“,”elementId”:”af877e79-849d-4294-9bcf-0283daaa14b1″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Thiru warns that the pace of easing in inflation could be slow:

“,”elementId”:”f18526a5-e0cf-47cd-af92-c08b2d4d4558″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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“November’s slowdown could be the start of a painful deceleration in inflation as slowing demand, rising interest rates and falling commodity prices weaken the headline rate, but at the cost of a protracted recession and notably higher unemployment.

\n

“With inflationary pressures looking more broad-based, the pace of easing is likely to be slow, which implies that wage growth will continue to trail inflation for some time, providing little respite to financially-squeezed households.

\n

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Chancellor Jeremy Hunt has warned that inflation is “the number one enemy”, saying:

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“The aftershocks of Covid-19 and (Vladimir) Putin’s weaponisation of gas mean high inflation is plaguing economies across Europe and I know families and businesses are struggling here in the UK.

\n

“Getting inflation down so people’s wages go further is my top priority, which is why we are holding down energy bills this winter through our energy price guarantee scheme and implementing a plan to help halve inflation next year.

\n

“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.

\n

“If we make the wrong choices now, high prices will persist and prolong the pain for millions.”

\n

“,”elementId”:”5b54a780-4f81-4498-aa78-b7b1fa39d43c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That’s a signal that the Treasury isn’t dropping its opposition to paying public sector staff a pay rise that would match inflation.

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

“,”elementId”:”a7f8ef87-8afe-492f-95fd-e601b883beba”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

UK inflation has slowed, and by more than expected, thanks to an easing in costs of second-hand cars and motor fuel.

“,”elementId”:”3a5ffbd0-5e28-4cd4-aa69-556fff1fba0c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The annnual UK CPI index slipped to 10.7% in November, falling back October’s 41-year high of 11.1%, data just released this morning show.

“,”elementId”:”667665c3-b14c-47cc-96d5-20df1d87340c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Office for National Statistics says the easing in annual inflation was principally due to “price changes in the transport division, particularly for motor fuels and second-hand cars.”

“,”elementId”:”2049627a-3bab-42e1-a602-7f05ead93c28″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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There were also downward effects from tobacco, accommodation services, clothing and footwear, and games, toys and hobbies. The largest, partially offsetting, upward effect came from price rises for alcohol in restaurants, cafes and pubs.

\n

“,”elementId”:”85279def-c6ec-43d2-b566-718072d5aa27″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

But as ONS chief economist Grant Fitzner points out, prices are still rising, just not as quickly.

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Prices in restaurants, cafes and pubs made the largest upward contribution to the inflation rate, as the cost of going out jumped.

“,”elementId”:”3a5b5134-3fb2-4b31-9397-48905c2dad25″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Fitzner says:

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“Prices are still rising, but by less than this time last year, with the most notable example of this being motor fuels.

\n

“Tobacco and clothing prices also rose, but again by less than we saw this time last year.

\n

“This was partially offset by prices in restaurants, cafes and pubs, which went up this year compared to falling a year ago.”

\n

“,”elementId”:”9fe83c4a-c682-42a7-8cc6-757ad34c257e”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

On a monthly basis, CPI rose by 0.4% in November 2022, compared with a rise of 0.7% in November 2021.

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Commenting on today’s inflation figures, ONS Chief Economist Grant Fitzner, said: (1/2)

⬇️ pic.twitter.com/P2m4tulZaY

— Office for National Statistics (ONS) (@ONS) December 14, 2022

\n”,”url”:”https://twitter.com/ONS/status/1602922190340775936″,”id”:”1602922190340775936″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”54a68753-8572-4c97-8403-ec2442f685ab”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

Grant Fitzner continued: (2/2)

⬇️ pic.twitter.com/62q2ALmH4N

— Office for National Statistics (ONS) (@ONS) December 14, 2022

\n”,”url”:”https://twitter.com/ONS/status/1602922392980160512″,”id”:”1602922392980160512″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”e85184f0-77bf-4e07-bbc1-d80d627353e3″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Overall, fuel prices rose by 17.2% in the year to November 2022, down from 22.2% in the year to October.

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The ONS says:

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Average petrol and diesel prices stood at 163.6 and 187.9 pence per litre in November 2022, compared with 145.8 and 149.6 pence per litre in November 2021.

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Also coming up today

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America’s central bank sets interest rates later today, a day after inflation across the Atlantic fell faster than expected. US CPI rose by 7.1% per year in November, down from 7.7% in October, a bigger fall than expected.

“,”elementId”:”f2cc7712-fb47-4bc7-9353-34bf9c5d35c5″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

This sparked a stock market rally yesterday, on hopes it could encourage the Federal Reserve to ease off on its interest rate rises.

“,”elementId”:”7d6e9d97-f54d-4fdc-8c3b-a9a51086af53″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:

“,”elementId”:”7f2fe557-5b9b-4b44-8c42-87cc4ddbfd61″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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The softer-than-expected inflation print in the US sent the stocks higher and the US dollar lower, but the S&P500 couldn’t clear key resistance levels, as investors know that the Federal Reserve (Fed) Chair Jerome Powell could coldheartedly kill the market joy at his post-FOMC press conference today.

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The agenda

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  • 7am GMT: UK inflation report for November

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  • 9am GMT: IEA monthly oil market report

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  • 9.30am GMT: UK house price index for October

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  • 7pm GMT: US Federal Reserve decision on US interest rates

  • \n

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Key events

UK households face a steep fall in living standards due to high inflation, warns Andrew Tully, technical director at insurance company Canada Life:

“,”elementId”:”3dd48e72-2c7b-403e-bb9e-02be02796355″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Tully explains:

“,”elementId”:”22588d72-a7dc-4952-b2ce-b0a115d61dda”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

\n

“While the headline numbers grab the news, the reality is underlying personal inflation rates for the things we buy every week, like food and energy, are running way above these headline figures, and our wages and pensions are simply not keeping up.

\n

“We are heading into a period where our living standards are predicted to fall by the largest amount since records began, and today’s inflation numbers will offer little comfort. As an example of the price pressures we face, four pints of milk cost £1.17 in September 2021 but that had increased rapidly to £1.52 by Sept 22. However, even as inflation slows, the price of that milk is likely to stay high, with the price simply not rising as fast as previously. The official economic forecasts are predicting a deep and protracted fall in living standards while we wait for our incomes to catch up.

\n

“For retirees on fixed incomes, the confirmation of a double-digit rise in the state pension from next April is helpful but is likely to offer little comfort in the winter months as the prices pensioners pay for everyday goods is still much higher.”

\n

The latest data leaves each UK household needing to find £2679 extra a year to maintain living standards, or the UK collectively £74.5 billion.

\n

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The drop in the UK’s CPI rate last month may suggest that inflation has peaked.

“,”elementId”:”94b4a7c5-1523-44b6-8b65-efc31a2196df”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

But, inflation still remains at a “precariously high rate”, says Suren Thiru, economics director at ICAEW (Institute of Chartered Accountants in England and Wales) and is “having a real impact on people and businesses”.

“,”elementId”:”af877e79-849d-4294-9bcf-0283daaa14b1″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Thiru warns that the pace of easing in inflation could be slow:

“,”elementId”:”f18526a5-e0cf-47cd-af92-c08b2d4d4558″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

\n

“November’s slowdown could be the start of a painful deceleration in inflation as slowing demand, rising interest rates and falling commodity prices weaken the headline rate, but at the cost of a protracted recession and notably higher unemployment.

\n

“With inflationary pressures looking more broad-based, the pace of easing is likely to be slow, which implies that wage growth will continue to trail inflation for some time, providing little respite to financially-squeezed households.

\n

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Chancellor Jeremy Hunt has warned that inflation is “the number one enemy”, saying:

“,”elementId”:”69e11474-dfd4-4752-b70f-18ef2b7be477″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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“The aftershocks of Covid-19 and (Vladimir) Putin’s weaponisation of gas mean high inflation is plaguing economies across Europe and I know families and businesses are struggling here in the UK.

\n

“Getting inflation down so people’s wages go further is my top priority, which is why we are holding down energy bills this winter through our energy price guarantee scheme and implementing a plan to help halve inflation next year.

\n

“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.

\n

“If we make the wrong choices now, high prices will persist and prolong the pain for millions.”

\n

“,”elementId”:”5b54a780-4f81-4498-aa78-b7b1fa39d43c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That’s a signal that the Treasury isn’t dropping its opposition to paying public sector staff a pay rise that would match inflation.

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

“,”elementId”:”a7f8ef87-8afe-492f-95fd-e601b883beba”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

UK inflation has slowed, and by more than expected, thanks to an easing in costs of second-hand cars and motor fuel.

“,”elementId”:”3a5ffbd0-5e28-4cd4-aa69-556fff1fba0c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The annnual UK CPI index slipped to 10.7% in November, falling back October’s 41-year high of 11.1%, data just released this morning show.

“,”elementId”:”667665c3-b14c-47cc-96d5-20df1d87340c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Office for National Statistics says the easing in annual inflation was principally due to “price changes in the transport division, particularly for motor fuels and second-hand cars.”

“,”elementId”:”2049627a-3bab-42e1-a602-7f05ead93c28″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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There were also downward effects from tobacco, accommodation services, clothing and footwear, and games, toys and hobbies. The largest, partially offsetting, upward effect came from price rises for alcohol in restaurants, cafes and pubs.

\n

“,”elementId”:”85279def-c6ec-43d2-b566-718072d5aa27″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

But as ONS chief economist Grant Fitzner points out, prices are still rising, just not as quickly.

“,”elementId”:”411e73bf-6718-4206-98ef-09950ef821eb”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Prices in restaurants, cafes and pubs made the largest upward contribution to the inflation rate, as the cost of going out jumped.

“,”elementId”:”3a5b5134-3fb2-4b31-9397-48905c2dad25″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Fitzner says:

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“Prices are still rising, but by less than this time last year, with the most notable example of this being motor fuels.

\n

“Tobacco and clothing prices also rose, but again by less than we saw this time last year.

\n

“This was partially offset by prices in restaurants, cafes and pubs, which went up this year compared to falling a year ago.”

\n

“,”elementId”:”9fe83c4a-c682-42a7-8cc6-757ad34c257e”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

On a monthly basis, CPI rose by 0.4% in November 2022, compared with a rise of 0.7% in November 2021.

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Commenting on today’s inflation figures, ONS Chief Economist Grant Fitzner, said: (1/2)

⬇️ pic.twitter.com/P2m4tulZaY

— Office for National Statistics (ONS) (@ONS) December 14, 2022

\n”,”url”:”https://twitter.com/ONS/status/1602922190340775936″,”id”:”1602922190340775936″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”54a68753-8572-4c97-8403-ec2442f685ab”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

Grant Fitzner continued: (2/2)

⬇️ pic.twitter.com/62q2ALmH4N

— Office for National Statistics (ONS) (@ONS) December 14, 2022

\n”,”url”:”https://twitter.com/ONS/status/1602922392980160512″,”id”:”1602922392980160512″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”e85184f0-77bf-4e07-bbc1-d80d627353e3″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Overall, fuel prices rose by 17.2% in the year to November 2022, down from 22.2% in the year to October.

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The ONS says:

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Average petrol and diesel prices stood at 163.6 and 187.9 pence per litre in November 2022, compared with 145.8 and 149.6 pence per litre in November 2021.

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Also coming up today

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America’s central bank sets interest rates later today, a day after inflation across the Atlantic fell faster than expected. US CPI rose by 7.1% per year in November, down from 7.7% in October, a bigger fall than expected.

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This sparked a stock market rally yesterday, on hopes it could encourage the Federal Reserve to ease off on its interest rate rises.

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Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:

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The softer-than-expected inflation print in the US sent the stocks higher and the US dollar lower, but the S&P500 couldn’t clear key resistance levels, as investors know that the Federal Reserve (Fed) Chair Jerome Powell could coldheartedly kill the market joy at his post-FOMC press conference today.

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The agenda

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  • 7am GMT: UK inflation report for November

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  • 9am GMT: IEA monthly oil market report

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  • 9.30am GMT: UK house price index for October

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  • 7pm GMT: US Federal Reserve decision on US interest rates

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Canada Life: A sharp drop in the standard of living is still looming

British households are facing a sharp drop in their standard of living due to high inflation, warns Andrew Tulytechnical manager at insurance company Canada Life:

Tuly explains:

“While the numbers grab the headlines, the reality is that the underlying personal inflation rates for the things we buy every week, like food and energy, are well above those numbers, and our wages and pensions just don’t keep up.

“We are heading into a period when our standard of living is expected to fall by the greatest amount since records began, and today’s inflation numbers will offer little comfort. As an example of the price pressures we are facing, four pints of milk cost £1.17 in September 2021, but this price had rapidly increased to £1.52 on September 22. However, even if inflation slows, the price of this milk is expected to remain high, with the price simply not rising as fast as before. Official economic forecasts predict a deep and prolonged decline in living standards as we wait for our incomes to catch up.

“For pensioners on fixed incomes, the confirmation of a double-digit increase in the state pension from next April is helpful but is likely to offer little comfort during the winter months, as the prices that retirees pay for everyday consumer goods are still much higher.”

The latest data requires every UK household to find an extra £2,679 a year to maintain their standard of living, or in the UK collectively £74.5 billion.

⚠️BREAKING:

*UK NOVEMBER CPI INFLATION RISES 10.7% Y/Y; EST. 10.9%; PREV. 11.1%

🇬🇧🇬🇧 pic.twitter.com/xxeZQSBWKt

— Investing.com (@Investingcom) December 14, 2022

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ICAEW: Inflation could only decline slowly

The fall in the CPI rate in the UK last month may suggest that inflation has peaked.

But inflation still remains at a “precariously high rate”, says Suren Thirueconomic director at ICAEW (Institute of Chartered Accountants in England and Wales) and “has a real impact on people and businesses”.

Thiru warns that the pace of slowing inflation could be slow:

“November’s slowdown could be the start of a painful deceleration in inflation, as slowing demand, rising interest rates and falling commodity prices weaken the headline rate, but at the cost of prolonged recession and significantly higher unemployment.

“With inflationary pressures looking more broad-based, the pace of easing is likely to be slow, implying that wage growth will continue to track inflation for some time, offering little respite to financially-struggling households.

Hunt: Bad inflation choices will prolong the pain

Chancellor Jeremy Hunt warned that inflation is “enemy number one”, saying:

“The aftershocks of Covid-19 and the weaponization of gas by (Vladimir) Putin means high inflation is plaguing European economies and I know families and businesses are struggling here in the UK.

“Reducing inflation so people’s wages go up is my top priority, which is why we are keeping energy bills down this winter through our energy price guarantee scheme and implementing a plan to help to halve inflation next year.

“I know it’s tough for many right now, but it’s vital that we make the hard decisions needed to fight inflation – the number one enemy that makes everyone poorer.

“If we make the wrong choices now, high prices will persist and prolong the suffering of millions of people.”

It is a signal that the Treasury is not giving up its opposition to paying public sector staff a wage increase that would match inflation.

Introduction: UK inflation slows to 10.7%

Hello and welcome to our ongoing coverage of business, financial markets and the global economy.

Inflation in the UK has slowed, and more than expected, thanks to lower prices for used cars and fuel.

The annual UK CPI the index slipped to 10.7% in November, falling back to 11.1%, the highest in October in 41 years, according to data released this morning.

The Office of National Statistics explains that the drop in annual inflation was mainly due to “price developments in the transport division, in particular for fuels and used cars”.

Tobacco, accommodation services, clothing and footwear, and games, toys and hobbies also had downward effects. The largest upward effect, partially offset, comes from price increases for alcohol in restaurants, cafes and pubs.

But as ONS Chief Economist Grant Fitzner points out, prices continue to rise, but not as rapidly.

Prices at restaurants, cafes and pubs contributed the most to the inflation rate as the cost of going out jumped.

Fitzner said:

“Prices continue to rise, but less than this time last year, the most notable example being fuels.

“Tobacco and clothing prices have also increased, but still less than we saw at this time last year.

“This has been partially offset by prices in restaurants, cafes and pubs, which have increased this year compared to the decline a year ago.”

On a monthly basis, the CPI increased by 0.4% in November 2022, compared to an increase of 0.7% in November 2021.

Commenting on today’s inflation figures, ONS Chief Economist Grant Fitzner, said: (1/2)

⬇️ pic.twitter.com/P2m4tulZaY

— Office for National Statistics (ONS) (@ONS) December 14, 2022

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Grant Fitzner continued: (2/2)

⬇️ pic.twitter.com/62q2ALmH4N

— Office for National Statistics (ONS) (@ONS) December 14, 2022

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Overall, fuel prices rose 17.2% on the year to November 2022, compared to 22.2% on the year to October.

ONS says:

Average petrol and diesel prices were 163.6 and 187.9 pence per liter in November 2022, compared to 145.8 and 149.6 pence per liter in November 2021.

Also coming today

The US central bank sets interest rates later today, a day after inflation across the Atlantic fell faster than expected. The US CPI rose 7.1% yoy in November, from 7.7% in October, a bigger drop than expected.

That sparked a stock market rally yesterday on hopes it could encourage the Federal Reserve to ease its interest rate hikes.

Ipek Ozkardeskaya, senior analyst at Swissquote Banksaid:

The print of weaker-than-expected inflation in the U.S. sent stocks higher and the U.S. dollar lower, but the S&P500 couldn’t break through key resistance levels as investors know the Chairman of the Reserve federal (Fed), Jerome Powell, could kill the market without mercy. joy at his post-FOMC press conference today.

Agenda

  • 7am GMT: UK inflation report for November

  • 09:00 GMT: IEA monthly oil market report

  • 09:30 GMT: UK house price index for October

  • 7pm GMT: US Federal Reserve decision on US interest rates

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