Just in time for the holidays, the United Kingdom has reported some festive inflation figures: the UK’s CPI (the Consumer Price Index) was at 3.9 percent YoY in November 2023, down significantly from October 2023’s 4.6 percent YoY.
Of this, core inflation (excluding energy, food, alcohol and tobacco) was at 5.2 percent, as opposed to October’s 5.6 percent. The annual goods rate for CPIH (CPI including housing costs) was arguably the best news of the hour, coming down substantially from 2.9 percent to two percent.
Like the Eurozone before it, who released their November inflation figures yesterday, the United Kingdom’s drop in inflation was largely attributed to cheapening oil prices bringing about the first decline in fuel prices in almost six months, bringing down the financial transport burden for many. However, softening food, beverage and recreation prices also played a part:
The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from transport, recreation and culture, and food and non-alcoholic beverages… Overall prices in the transport division fell by 1.4 percent in the year to November 2023, compared with a rise of 0.5 percent in October. The annual rate for transport was most recently negative in June to August 2023. Prices fell by 1.7 percent between October and November this year, compared with a slight rise of 0.1 percent between the same two months a year ago. The easing in the annual rate was the result of downward effects from motor fuels and, to a lesser extent, second-hand cars, maintenance and repairs, and air fares.”
The lower inflation comes at a good time of year for many, with holiday shopping and winter in full swing. Even better, it may clear the path for the Bank of England to lower inflation rates early in 2024. Many consumers would no doubt welcome this, after an especially brutal rate hiking cycle. As the Office for National Statistics notes:
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2 percent in the 12 months to November 2023, down from 4.7 percent in October and down from a recent peak of 9.6 percent in October 2022. Our indicative modelled consumer price inflation estimates suggest that the October 2022 rate was the highest in over 40 years (the CPIH National Statistic series begins in January 2006). The annual rate in November 2023 was the lowest since October 2021.”
However, the release did note that there was some work still to be done, in that “UK inflation is easing but remains above that of the EU and Germany.”