London Daily

Focus on the big picture.
Tuesday, Sep 22, 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
British Museum Faces Questions Over Peter Thiel’s Private Bayeux Tapestry Viewing
Earl Spencer Memoir Excerpts Renew Public Debate Over Diana’s Death
Liberal Democrats Gather in Brighton for Autumn Conference
Mothercare Shares Plunge as Middle East Store Closures Threaten Long-Term Solvency
Kent Police Treat Folkestone Hotel Fire as Suspicious
Caribbean Governments Advance Reparations Campaign Seeking Engagement With Britain
Scottish Labour Leader Backs Rosebank and Jackdaw North Sea Projects
FCA Urges Young Adults to Trace £1.5 Billion in Unclaimed Child Trust Funds
UK Competition Regulator Opens Inquiry Into McCormick-Unilever Foods Deal
Public Inquiry Into Tees, Esk and Wear Valleys Mental Health Failings Set to Begin
Nigel Farage Looks to US Immigration Enforcement Model for UK Border Policy
Chiltern Railways Moves Into Public Ownership
Security Review Raises Concerns Over Sensitive UK Police Data Stored on Microsoft Cloud
Burnham Government Warns of Difficult Autumn Budget as Fiscal Headroom Narrows
Bank of England Holds Rates at 3.75% as Inflation Rises to 3.1%
Ed Sheeran Tour Faces Backlash After Macklemore Is Removed Over Pro-Palestinian Remarks
Vandalism of Traffic Cameras Intensifies Across Parts of England
Nearly 300 Evacuated as Fire Hits Grand Burstin Hotel in Folkestone
King Charles Warns AI Executives About Risks From Uncontrolled Technology
Church of England Apologises for Role in Historical Forced Adoption Practices
UK Debate Over Online Speech Intensifies After Arrest Figures Draw Scrutiny
Oxfordshire Village Holds Symbolic Independence Vote Over Asylum Accommodation Plan
Nigel Farage and Richard Tice Sue National Crime Agency Over Alleged Banking Data Leaks
Apple Introduces Stricter Age Checks for UK Accounts
BBC Cash Reserves Fall 66% to £125 Million as Broadcaster Restructures
McLaren Announces £500 Million UK Investment and Plans 1,000 Jobs
Green Party Wins Historic Gorton and Denton By-Election as Labour Falls to Third
Burnham Government Prepares October Budget Under Growing Fiscal Pressure
UK Energy Suppliers Pull Fixed-Price Deals as Wholesale Markets Turn More Volatile
Bank of England Holds Rates at 3.75% as Middle East Energy Shock Raises Inflation Risks
Addison Lee Founder Loses £20 Million UK Tax Tribunal Case
BrewDog Creditors Face Losses on About £190 Million of Debt
Harrods Seeks to Recover Abuse Compensation Costs From Mohamed Al Fayed’s Estate
Ed Davey Targets Reform UK as Liberal Democrat Conference Opens
Great Britain Retail Sales Rise 0.5% in August
NHS England Approves Life-Extending Treatment for Incurable Breast Cancer
Proposals to Limit NHS ADHD Diagnoses Draw Criticism From Patient Groups
Resolution Foundation Warns of Housing Cost Crunch for Low-Income UK Families
BBC Cash Reserves Fall to Decade Low as Annual Deficit Reaches £121 Million
Millisecond Software Error Triggered Major UK Air Traffic Control Disruption
Twenty Women Underwent Unnecessary Mastectomies During NHS Cancer Care
Sensitive UK Police Data Found Vulnerable to Access by Foreign Actors
British Steel Faces Renewed Pressure for a Long-Term Financial Plan
MPs Urge Government to End Thames Water Restructuring Talks With U.S. Hedge Funds
Andy Burnham Warns of Difficult UK Budget Choices as Inflation Returns to 3.1%
England Tightens School Food Standards With Restrictions on Deep-Fried and High-Sugar Foods
Oxfordshire Village Votes Symbolically to Leave UK Over Proposed Asylum Centre
Michael Marra Elected Leader of Scottish Labour
BBC Cash Reserves Fall Sharply as Financial Pressures Mount
George Osborne Calls for UK to Rejoin EU Customs Union
×