CPI falls to 10.7% in the year to November, figures out today show.
Transport costs, particularly a slowing in the rise of fuel prices primarily behind the drop while food prices up 16.5% – fastest hike since 1977.
Danni Hewson, AJ Bell financial analyst, comments on the latest UK inflation figures: “News that prices aren’t rising quite as quickly as they were last month is positive news, but they are still rising and at more than twice the rate they were this time last year.
“There will be much debate about whether the slight dip is a sign that the relentless price rises that households have endured over the last 18 months might finally be coming to an end, but one drop doesn’t signify a trend. Look back just a couple of months when August’s cooling breeze quickly gave way to an Autumn which delivered a 40-year inflation high.
“And whilst transport costs, particularly the price we pay at the pump, have dropped back from record levels and many retailers have offered early discounts, there is plenty of data that shines a spotlight on the discomfort being felt across the country.
“Food prices have risen for 16 consecutive months and perhaps the memo that inflation has peaked has got stuck in postal disruption because here it’s still heading up – in fact the last time we experienced this kind of change at the supermarket till was 1977. For families faced with festive expectation the next few weeks are going to be fraught.
“Even with government intervention energy bills are draining household budgets and there will be plenty of people already worrying about what next year might bring and the impact further increases to our bills will have on the inflation number the Bank of England is working so hard to stamp down.
“Today’s number will do little to persuade striking workers to accept pay deals that don’t come close to covering the rising cost of living. But with wage hikes comes the spectre of stagflation. Overall goods and core inflation have started to come down thanks to global shifts, but inflation in the service sector has ticked up at the highest rate since 1993.
“And the cruellest truth that people are just beginning to come to terms with is that even as inflation normalises and gets back towards that 2% target range prices won’t fall, they just won’t be going up in the leaps and jumps that have shocked so many of us. Our standard of living has taken a beating and making do with less is something we’ll just have to get used to.”