UK inflation falls to 3.2%, adding to case for interest rate cut

UK inflation cooled to 3.2% in November, boosting chances of Bank of England rate cut.

SUMMARY

Official figures show UK inflation dropped to 3.2% in November, strengthening expectations for the Bank of England to cut interest rates amid economic slowdown and government fiscal measures.

KEY HIGHLIGHTS

UK inflation rate fell from 3.6% in October to 3.2% in November.
Bank of England likely to cut interest rates due to easing inflation and weaker economic growth.
Chancellor Rachel Reeves targets cost of living in autumn budget with tax increases and relief measures.
Economy shrank unexpectedly in October amid consumer caution and manufacturing challenges.

CORE SUBJECT

UK inflation and Bank of England interest rate policy

UK inflation significantly cooled in November to 3.2%, official figures show, strengthening the case for the Bank of England to cut interest rates on Thursday.

In a crunch week for the economy, the Office for National Statistics said the annual inflation rate as measured by the consumer prices index eased last month from a reading of 3.6% in October, overshooting City forecasts of a modest drop to 3.5%.

Threadneedle Street is expected to cut its base rate on Thursday amid weaker economic growth, rising unemployment and easing inflationary pressures. Financial markets predicted a 90% probability of a quarter-point reduction before the release of the latest inflation snapshot.

The chancellor, Rachel Reeves, made tackling the cost of living a major target of last month's autumn budget, alongside £26bn of tax increases to help repair the public finances and fund the end of the two-child benefit cap.

The Bank has said it expects the chancellor's measures - including relief on energy bills, prescription charges and fuel duty - could cut headline inflation by as much as half a percentage point next year.

However, figures last week showed the economy unexpectedly shrank in October as consumers held back on spending amid intense pre-budget speculation over tax changes and car manufacturing struggled to recover from a cyber-attack on Jaguar Land Rover.

KEYWORDS

UK inflation Bank of England interest rates economic growth cost of living

MENTIONED ENTITIES 4

Bank of England

🏛️ Organization

Central bank of the United Kingdom responsible for monetary policy

Rachel Reeves

👤 Person_Female

Chancellor of the Exchequer of the United Kingdom

Office for National Statistics

🏛️ Organization

UK government agency responsible for collecting and publishing statistics

Jaguar Land Rover

Business

British multinational automotive company