Inflation unexpectedly falls to 3.2%

(Sharecast News) - Inflation fell by more than expected in November, official data showed on Wednesday, to the lowest level for eight months. According to the Office for National Statistics, the consumer prices index rose by 3.2% in the 12 months to November, down from 3.6% in October. Consensus had been for 3.5%.

The Bank of England will announce its latest decision on interest rates on Thursday, and the fall will further bolster arguments for a cut. Should that be the case, it would be the fourth this year.

However, inflation still remains above the BoE's long-term 2% target.

Food and non-alcoholic beverages - which normally rise at this time of the year - made the largest downward contributions to inflation in November, the ONS said. Prices rose by 4.2%, down from 4.9% in October.

The biggest downward effects were seen in the prices of cakes, biscuits and breakfast cereals. Softer prices in dairy products and sugar - including jams and confectionary - also contributed.

Grant Fitzner, chief economist at the ONS, added: "The increase in the cost of goods leaving factories slowed, driven by lower food inflation, while the annual cost of raw materials for businesses continued to rise."

Core inflation, which strips out the more volatile elements of energy, food, alcohol and tobacco, fell to 3.2% from 3.4%.

Including owner occupiers' housing costs, CPIH rose by 3.5% in November, compared to 3.8% a month previously.