UK Inflation dropped to its lowest in 20 months in November, as falling petrol prices helped provide a boost to shopper’s pockets.
The monthly Consumer Price Index showed that year-on-year inflation rose 2.3% in November, falling from 2.4% in October.
The figures aligned with City economists’ expectations, according to polling by Reuters.
Food inflation slowed significantly, as it increased just 0.1% for the 12 month period, plunging from a peak rate of 4.4% on year earlier.
Inflation in the sector dropped as the effect of the weaker pound pushing up import costs dramatically faded, the Office for National Statistics added.
Petrol prices also contributed to the overall fall, with prices down 1.1% compared to a 1.6% incease in 2017.
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Tobacco prices made the largest upward impact, after they rose on the back of Budget tax increases. Clothing prices, hotels and restaurants also saw accelerating inflation.
People’s spending power improved during 2018, as inflation dropped over the year while wage growth accelerated. Average weekly earnings rose 3.3% in the year to October, according to data published last week.
“Inflation was little changed as falling petrol prices, thanks to a substantial drop in the cost of crude oil, were offset by rises in tobacco prices following the duty changes announced in the Budget,” ONS head of inflation Mike Hardie said.
Policymakers at the Bank of England have said that faster wage growth could result in high inflation, as companies absorb the increased cost amidst low productivity growth in the UK. The Bank of England is targeting a 2% rate of inflation.
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