"UK inflation fell by more than expected in November to the lowest level in eight months amid a slowdown in food prices, clearing the way for the Bank of England to cut interest rates on Thursday. In a crunch week for the economy, the Office for National Statistics said the rate as measured by the consumer prices index eased to 3.2% last month from a reading of 3.6% in October. City economists had forecast a modest drop to 3.5%."
"Lower food prices, which traditionally rise at this time of the year, were the main driver of the fall, with decreases seen particularly for cakes, biscuits, and breakfast cereals. Tobacco prices also helped pull the rate down, with prices easing slightly this month after a large rise a year ago. The fall in the price of women's clothing was another downward driver."
"Analysts said a cut in the Bank's base rate was all-but nailed on before its policymakers meeting on Thursday, as faltering economic growth and rising levels of unemployment bear down on inflationary pressures. November's drop in UK inflation is just the latest sign that price pressures are abating and that the Bank of England has more work to do. We expect a rate cut on Thursday and two more next year, said James Smith, the developed markets economist at ING."
The Office for National Statistics reported UK consumer price inflation slowed to 3.2% in November from 3.6% in October, below City forecasts of 3.5%. The headline slowdown was driven by falling pre-Christmas food prices, notably cakes, biscuits and breakfast cereals, alongside easing tobacco prices and lower women's clothing costs. Analysts and markets saw a stronger case for a Bank of England base rate cut, with trading implying more than a 90% chance of a quarter-point reduction from 4%. The pound fell 0.7% against the dollar and government borrowing costs eased amid expectations of further cuts as growth falters and unemployment rises.
Read at www.theguardian.com
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