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Image Credit - The Economics Times[/caption]
UK’s inflation rate fell more than expected rate last month which is driven mostly by a massive drop in fuel prices. The prices rose by 3.9% in November which is down by 4.6% in October. This caused a slowing in the price rise for food including some staples such as milk, butter, and pasta along with a price rise in household items, which were also behind the fall. However, while the inflation rate is now way down from its peak in the previous year, it is still almost the double 2% target of the Bank of England. The falling interest rate does not signify the items will be priced at a much cheaper rate, rather the price increase rate will be slower.
The chief economist at the Office for National Statistics (ONS), Grant Fitzner said that while UK inflation had eased again, "prices remain substantially above" what they were before Russia invaded Ukraine. Following the outbreak of war, a major impact was on the global oil prices that soared in 2022, which pushed the prices of diesel and petrol to record marks. However, these oil prices have since fallen back and according to the RAC Motoring Group, the pump prices are now at their lowest level for more than two years. Now a litre of unleaded costs about £1.43 on average, which was a price last seen at UK forecourts in October 2021.
According to the ONS, food prices also continued to slow in the month of November which was seen in the falling prices of cereals and bread. However, food is still 9% more expensive in the country than it was a year ago. This marked the ease in the cost of living in the UK. However, many households will not feel this, especially with no major impact on borrowing costs and energy bills. Despite the lower prices of gas and electricity than last year, most households will have to pay more than last year on energy as the government's support for this bill is no longer in place.
Meanwhile, in order to slow price rises, the Bank of England has put up interest rates at least 14 times higher than last year. Rates are now 5.25%, a 15-year high that leads to not only higher borrowing costs for mortgages but also higher savings rates. Andrew Bailey, the bank's governor has ruled out on cutting rates anytime soon despite the weakening economic growth.
Chancellor Jeremy Hunt said that the current inflation rate set the country "back on the path to healthy, sustainable [economic] growth", but that the government would "continue to prioritize measures that help with cost of living pressures". Labour's shadow chancellor, Rachel Reeves said, "prices are still going up in the shops, household bills are rising and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy". UK's inflation rate remains higher than other countries like the U.S., and Germany, however, the gap is narrowing down.
Image Credit - The Economics Times[/caption]UK’s inflation rate fell more than expected rate last month which is driven mostly by a massive drop in fuel prices. The prices rose by 3.9% in November which is down by 4.6% in October. This caused a slowing in the price rise for food including some staples such as milk, butter, and pasta along with a price rise in household items, which were also behind the fall. However, while the inflation rate is now way down from its peak in the previous year, it is still almost the double 2% target of the Bank of England. The falling interest rate does not signify the items will be priced at a much cheaper rate, rather the price increase rate will be slower.
The chief economist at the Office for National Statistics (ONS), Grant Fitzner said that while UK inflation had eased again, "prices remain substantially above" what they were before Russia invaded Ukraine. Following the outbreak of war, a major impact was on the global oil prices that soared in 2022, which pushed the prices of diesel and petrol to record marks. However, these oil prices have since fallen back and according to the RAC Motoring Group, the pump prices are now at their lowest level for more than two years. Now a litre of unleaded costs about £1.43 on average, which was a price last seen at UK forecourts in October 2021.
According to the ONS, food prices also continued to slow in the month of November which was seen in the falling prices of cereals and bread. However, food is still 9% more expensive in the country than it was a year ago. This marked the ease in the cost of living in the UK. However, many households will not feel this, especially with no major impact on borrowing costs and energy bills. Despite the lower prices of gas and electricity than last year, most households will have to pay more than last year on energy as the government's support for this bill is no longer in place.
Meanwhile, in order to slow price rises, the Bank of England has put up interest rates at least 14 times higher than last year. Rates are now 5.25%, a 15-year high that leads to not only higher borrowing costs for mortgages but also higher savings rates. Andrew Bailey, the bank's governor has ruled out on cutting rates anytime soon despite the weakening economic growth.
Chancellor Jeremy Hunt said that the current inflation rate set the country "back on the path to healthy, sustainable [economic] growth", but that the government would "continue to prioritize measures that help with cost of living pressures". Labour's shadow chancellor, Rachel Reeves said, "prices are still going up in the shops, household bills are rising and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy". UK's inflation rate remains higher than other countries like the U.S., and Germany, however, the gap is narrowing down.
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