Britain’s annual inflation rate slowed more than expected in November, falling to 3.2 percent, according to official data released on Wednesday. The decline has strengthened expectations that the Bank of England will cut interest rates this week.
The Office for National Statistics (ONS) said the Consumer Prices Index dropped from 3.6 percent in October, below the 3.5 percent forecast by analysts.
The Bank of England is widely expected to reduce its main interest rate by 0.25 percentage points to 3.75 percent on Thursday, as the UK economy continues to struggle with weak growth and rising unemployment.
ONS Chief Economist Grant Fitzner said inflation fell to its lowest annual level since March, largely due to lower food prices. He noted that prices for items such as cakes, biscuits, and breakfast cereals declined, despite typically rising at this time of year.
Finance Minister Rachel Reeves welcomed the data, saying lowering household bills remains her top priority. She recently announced measures in the Labour government’s budget to reduce energy and rail ticket costs.
Following the inflation report, the pound weakened against the dollar as markets priced in a rate cut. Paul Dales, chief UK economist at Capital Economics, said the sharp fall in inflation was likely enough to prompt the Bank of England to cut rates, adding that further reductions could follow next year as inflation moves closer to the bank’s two-percent target.