London Daily

Focus on the big picture.
Monday, Nov 02, 2026

UK inflation falls from 41-year high in run-up to BoE rate decision

UK inflation falls from 41-year high in run-up to BoE rate decision

British inflation fell more than expected in November after it hit a 41-year high in October, raising hopes that the price surge has peaked and offering some comfort to the Bank of England as it prepares to raise interest rates again.
The annual rate of consumer price inflation dropped to 10.7% in November from 11.1% in October, the Office for National Statistics (ONS) said, a bigger fall than the decline to 10.9% which economists had forecast in a Reuters poll.

The United States and the euro zone have also reported larger-than-expected drops in inflation for November.

"Prices are still rising, but by less than this time last year with the most notable example of this being motor fuels," ONS chief economist Grant Fitzner said.

Like other central banks, the BoE is battling inflation that is far above its 2% target and it has raised rates sharply over the past 12 months, including a three-quarter-point rate rise in November, its biggest in over 30 years.

Economists mostly expect the BoE will raise rates again on Thursday to 3.5% from 3%, despite the BoE's own forecasts that the economy is heading into a long recession.

Inflation in Britain is higher than in the United States or the euro zone as a whole, though below that in Germany.

The Bank of England has been left in a difficult spot, and its policymakers are increasingly divided on the right response.

"Unfortunately for the UK, the economy is being hit by U.S.-style wage pressures and a European-style energy crisis, all at the same time," said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.

Paul Dales, chief UK economist at Capital Economics, said the latest data reduced the likelihood of rates peaking as high as his previous forecast of 4.5%.

Thursday's decision is likely to see another split vote by BoE officials who disagree on the extent to which a recession will cool price pressures and how much of the impact of past rate rises is yet to be felt.

LIVING STANDARDS SQUEEZE

British inflation began to pick up last year, driven by post-pandemic bottlenecks in the domestic and global economy, and accelerated when European energy prices surged after Russia's invasion of Ukraine in February.

Last month, the government's budget watchdog warned of the biggest squeeze on living standards since records began in the 1950s, and the BoE does not expect inflation to return to target until early 2024.

Price rises have been concentrated in areas such as food and energy, hitting those on low incomes the hardest. Food and drink cost 16.4% more in November than a year earlier - the biggest rise since 1977 - driven by more expensive bread.

Finance minister Jeremy Hunt said it was "vital that we take the tough decisions needed to tackle inflation".

Britain faces a wave of industrial action, especially in the public sector where pay has not kept up with the private sector or with rising prices.

The BoE has said labour shortages as well as trade and migration frictions due to Brexit have helped to push up prices.

The breakdown of inflation components in Wednesday's report offered mixed signals on how fast inflation is likely to fall.

Core CPI - excluding energy, food, alcohol and tobacco prices, and which some economists watch for longer-term price trends - dropped to 6.3% in November from 6.5% in October.

But services sector inflation - which some BoE officials think reflects wage pressures being passed on by companies - held at October's 30-year high of 6.3%.

Retail price inflation - widely used for commercial contracts, wage negotiations and inflation-linked bonds - fell to 14.0% from 14.2%.
Newsletter

Related Articles

0:00
0:00
Close
House of Lords Begins Detailed Legislative Scrutiny of Representation of the People Bill and Cyber Security Laws
Metropolitan Police Detain More Than Three Hundred Individuals Following Large-Scale Demonstration Outside London Embassy
Home Office Prepares Stricter Residency Rules Requiring Vulnerable Migrants to Wait Decade for Settlement Rights
Professional Mental Health Bodies Demand Statutory Regulation for Counsellors and Psychotherapists
National Grid Confirms Construction of Britain's Largest Electrical Substation to Power Teesside Data Centre
Prime Minister Keir Starmer Travels to Samoa for Commonwealth Summit Amid Debates on Economic Cooperation and Reparations
Home Office Implements Enhanced Digital Border Controls and Visa Processing Systems at Major Airports
Office for National Statistics Reports Stable Employment Participation Rates Across Regional Labor Markets
Department for Business and Trade Announces Strategic Partnership to Secure Critical Mineral Supply Chains
Scottish Government Unveils Regional Economic Development Strategy to Boost Advanced Manufacturing in Glasgow and Dundee
Treasury Officials Review Taxation Frameworks and Capital Gains Rules Ahead of Autumn Budget Disclosures
National Health Service Leaders Warn of Winter Capacity Pressures Across Acute Care Facilities
Bank of England Prepares for Key Interest Rate Decision Amid Sticky Inflation and Fiscal Policy Pressures
Home Office Expands Border Security Operations and Intelligence Sharing With European Partners
Office for National Statistics Reports Modest Retail Sales Growth Ahead of Crucial Christmas Trading Season
Welsh Government Unveils Strategic Plan to Boost Regional Technology Innovation and Digital Skills Training
Department for Environment Food and Rural Affairs Implements New Agricultural Subsidies Framework for English Farmers
Scottish First Minister John Swinney Announces Major Regional Infrastructure and Green Energy Investment Strategy
National Health Service Leaders Warn of Severe Winter Pressures and Mounting Accident and Emergency Backlogs
Bank of England Monetary Policy Committee Signals Cautious Interest Rate Path Amid Persistent Services Inflation
Chancellor of the Exchequer Rachel Reeves Finalizes Autumn Budget Framework Aiming to Close Public Sector Fiscal Gap
Department for Science, Innovation and Technology Prepares Enhanced Artificial Intelligence Safety and Cyber Defense Frameworks
United Kingdom Government Expands International Sanctions Framework Against Russian Shadow Fleet and Financial Enablers
Institute of Directors Reports Sharp Post-Budget Drop in Business Confidence Despite Long-Term Investment Intention Shifts
Chancellor John Healey Defends Sweeping Fiscal Adjustments and Household Support Packages Following Autumn Budget
Parliamentary Petitions Committee Schedules Major Legislative Debates on Special Educational Needs and Non-Stun Meat Labelling
Regional Devolution and Good Growth Fund Frameworks Reshape Local Government Funding Across English Regions
Loughborough University Economic Analysts Highlight Substantial Uncertainty Surrounding Public Sector Efficiency Savings
British Legal Sector Drives Sixty Billion Pounds in Annual Economic Output While Employing Over Half a Million Professionals
Law Society Welcomes New Better Regulation Executive While Pressing for Long-Term Legal Aid Funding Reform
Metropolitan Police and Security Services Heighten Operations Across London Ahead of Large-Scale Public Demonstrations
Bank of England Economists Scrutinize Corporate Tax Adjustments and Public Sector Borrowing Pressures
Chancellor John Healey Defends Autumn Budget Tax and Spending Allocations Following Intense Parliamentary Scrutiny
Department for Environment, Food and Rural Affairs Implements Strict Water Quality Monitoring Rules Following Severe Rainfall and Flooding
Welsh Government Unveils Comprehensive Regional Housing Strategy to Address Rural Affordability and Homelessness Pressures in Cardiff
Office for National Statistics Reports Slowing Consumer Price Inflation and Steady Retail Performance Across United Kingdom Markets
Northern Ireland First Minister Michelle O'Neill and Deputy First Minister Emma Little-Pengelly Advance Cross-Border Infrastructure Agreement in Belfast
Competition and Markets Authority Launches Formal Investigation Into Artificial Intelligence Partnerships Involving Major Technology Corporations
Scottish First Minister John Swinney Secures Cross-Party Support for Devolved Budget Framework and Renewable Energy Expansion
High Court Rules in Favor of Environmental Campaigners Over Department for Energy Security and Net Zero Licensing Procedures
National Health Service England Announces Major Digital Modernization and Artificial Intelligence Diagnostic Rollout Across Regional Trusts
Bank of England Monetary Policy Committee Signals Cautious Approach to Interest Rate Cuts Amid Persistent Wage Growth and Inflation Pressures
British Prime Minister Keir Starmer and Chancellor Rachel Reeves Outline Strategic Infrastructure Plans to Boost Regional Growth and Private Investment
Water pollution remains high despite £5bn investment
Regional Economic Divergence and Industrial Transformation
Technological Sovereignty and Regulatory Scrutiny
Fiscal Consolidation and Public Service Pressures
Automotive Industry Leadership Warns of Imminent Supply Chain Disruptions Following Recent European Trade Negotiations
High Court Delivers Landmark Ruling Affirming Strict Legal Protections for Corporate Data Privacy Against State Surveillance
Welsh First Minister Eluned Morgan Secures Additional Funding for Regional Transport Infrastructure and Rail Modernization
×