Inflation dips but soaring food and energy prices keep pressure on households

Inflation eased back by more than expected last month from October’s 41-year high, but households remained under pressure due to sky-high food and energy costs, according to official figures.

The Office for National Statistics (ONS) said the rate of Consumer Prices Index (CPI) inflation fell to 10.7% in November, from 11.1% in October.

It said the drop largely followed falls in the price of petrol and diesel.

Economists had expected CPI inflation to fall to 10.9%.

It marks a welcome decline from the eye-watering 11.1% seen in October, when soaring energy bills sent inflation to its highest level since October 1981.

Experts believe October was the peak for inflation, with the worst now behind us.

Food prices

But food prices are still surging – up by 16.4% on annual basis last month – while power costs are still painfully high, despite government support limiting the annual bill to around £2,500 since October.

ONS chief economist Grant Fitzner said: “Although still at historically high levels, annual inflation eased slightly in November.

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

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

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

The figures come ahead of the Bank of England’s interest rate decision on Thursday, when it is expected to heap further misery on households with another increase despite inflation abating, with a likely rise from 3% to 3.5% to rein in surging inflation.

Chancellor Jeremy Hunt said inflation is “the number one enemy”.

He said: “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.

“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.

“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.”

Fuel

The ONS data said prices at the fuel pumps were among the biggest driver of falling inflation, with petrol unchanged between October and November this year, at 163.6p a litre on average, but rising by 7.2p a litre a year earlier.

Diesel price increases also eased, rising by 4p a litre this year to 187.9p, compared with a larger rise of 7.4p a litre a year ago.

Second-hand car prices also helped CPI fall back, with a 5.8% drop in the year to November compared with a 2.7% fall in the year to October.

The ONS added that tobacco prices rose by 0.1% in November, compared with a 4.2% rise a year ago when duty rates increased as announced in the autumn 2021 Budget.

Clothing and footwear saw a 7.5% annual increase on price tags, though this was down from 8.5% in October.