The ONS found that the core Consumer Prices Index (CPI) rate for the 12 months to November this year was down from 3.4% in the 12 months to October.
Meanwhile, the CPI including owner-occupiers’ housing costs (CPIH) was up by 3.5% in the 12 months to November, which is a decrease from 3.8% in the 12 months to October.
From a monthly perspective, the CPIH experienced a 0.1% drop last month versus a rise of 0.2% in November last year.
Though inflation has slightly eased from the high of 3.8% seen in several months this year, it still remains significantly above the Bank of England’s 2% target.
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Base rate cut tomorrow is likely
The Bank of England’s Monetary Policy Committee (MPC) will announce the final base rate decision of the year tomorrow, and this latest inflation figure bolsters hopes of a pre-Christmas cut.
David Hollingworth, associate director at L&C Mortgages, said: “Today’s inflation figures will bring some cheer to borrowers and a more significant easing than anticipated underlines the strong expectation of another rate cut tomorrow. Inflation remains higher than the Bank of England’s target, but this should be enough to signal a more sustainable path of easing.
“Stubborn inflation has held back the pace of rate cuts, but while a December rate cut looked far from likely in the summer, it now looks like a cert. The MPC vote was finally balanced last month, but with unemployment figures on the rise and inflation easing, it would be a major shock if base rate does not fall again tomorrow.
“Rising market expectation of another rate cut coming sooner than previously expected has already helped to drive down the cost of fixed rate mortgages. That will be welcome news for those thinking about moving home or coming to the end of a deal and lenders have shown little let-up in their repricing activity as the festive season approaches. I’d expect to see that competition… continue in the new year, as lenders look to get off on the right foot.”
Isaac Stell, investment manager at Wealth Club, added: “UK inflation undershot expectations in November, bolstering the case for interest rate cuts in the face of challenging economic conditions.
“Not only did the headline rates fall far more than anticipated, but services inflation, a key concern for the Bank of England, also declined to 4.4%.
“Despite inflation falling, there is still some way to go before the headline rates fall back to the 2% target. However, today’s news is a bright spot for the Bank of England, government and consumers alike. With challenging economic conditions in the form of declining GDP and an unemployment rate nearing a five-year high, it is hoped a perfectly wrapped rate cut tomorrow will deliver some festive cheer to the UK economy.”
