Falling petrol prices saw inflation slow to 10.7% in November

The Office of National Statistics’ (ONS) Consumer Price Index (CPI) measure of inflation fell in November to 10.7%, thanks in part to falling prices of petrol and diesel prices.

The latest ONS figures recorded a 0.4 percentage-point drop in the rate of inflation, which hit 11.1% in October after a rise in domestic energy prices was implemented through the government’s Energy Price Guarantee scheme.

Despite having fallen on the previous month’s figures, motor fuels remain more expensive than in November 2021, and many other categories continued to increase in price, including for food and drink, both at the supermarket and in hotels, pubs and restaurants.

Global factors continue to be the main drivers of inflation. The war in Ukraine is impacting food prices, due to the country’s role as a major exporter of agricultural staples, particularly grain and cooking oil, while sanctions on Russia for instigating the conflict has put pressure on energy supplies. Supply chain challenges due to Brexit and following the pandemic are also pushing up prices of imports to higher levels than many other developed nations, while a strengthening of the US dollar, the currency in which many key commodities are traded internationally, has also taken its toll on prices.

With inflation persisting at high levels, the Bank of England will be expected to decide raise interest rates further tomorrow in line with their remit to return to the target level of inflation of 2%. The Federal Reserve is also expected to increase interest rates in the USA this week, as well as the Eurozone’s European Central Bank.