Annual CPI inflation came in at 3.2% in November, down from 3.6% in October and well below consensus forecasts of 3.5%.
Core inflation also fell to 3.2%, down from 3.4% in October, while monthly inflation is down from 0.4% in October to -0.2%.
The main drivers of decline were food prices followed by alcohol, tobacco and clothing.
Industry experts now predict that the Bank of England's Monetary Policy Committee will reduce Bank Rate by 0.25% at tomorrow's meeting.
Luke Bartholomew, deputy chief economist at Aberdeen, said: “The sharp drop in inflation in November means that a cut in Bank Rate tomorrow is all but certain. While the vote might still be close, it is not very hard to see where a majority comes from to keep policy on hold, especially given the soften of food inflation in this report, given the importance some policymakers have placed on food prices as a driver of household inflation expectations. Inflation is set to fall further next year due to mechanical base effects and policy announcements in the recent budget. This should keep rates falling through 2026, after the cut this week."
David Hollingworth, associate director at L&C Mortgages, commented: “Today’s inflation figures will bring some cheer to borrowers and a more significant easing than anticipated underlines the strong expectation of another rate cut tomorrow. Inflation remains higher than the Bank of England’s target, but this should be enough to signal a more sustainable path of easing.
"Stubborn inflation has held back the pace of rate cuts but while a December rate cut looked far from likely in the summer, it now looks like a cert. The MPC vote was finally balanced last month, but with unemployment figures on the rise and inflation easing, it would be a major shock if base rate does not fall again tomorrow.
"Rising market expectation of another rate cut coming sooner than previously expected has already helped to drive down the cost of fixed rate mortgages. That will be welcome news for those thinking about moving home or coming to the end of a deal and lenders have shown little let up in their repricing activity as the festive season approaches.
"I’d expect to see that competition to continue in the New Year, as lenders look to get off on the right foot.”
Joseph Greif, investment director at wealth management firm Evelyn Partners, said: “This report follows on from yesterday’s UK employment data, which also showed average earnings cooling alongside a rise in the unemployment rate to 5.1%. A backdrop of weaker hiring plus more available workers can often lead to a decline in overall wage growth, supporting this disinflationary momentum.
“A continued decline in CPI from the late summer highs of 3.8% represents an early Christmas present for the Bank of England but given that the current level remains1.2% away from the 2% target level there is still some work to be done. If this downward trajectory in inflation continues the BoE’s inflation forecasts that project a 2% headline inflation by summer 2027 may well prove accurate.
“Tomorrow, the Bank of England hold their final Monetary Policy Committee (MPC) meeting of 2025, with an overwhelming consensus expecting a 0.25% cut which would bring the policy rate to 3.75%, matching that of the US Federal Reserve. Today’s continued decline in CPI will help reduce any lingering concerns that some MPC members might have had about continuing to lower interest rates.”
Derrick Dunne, CEO of YOU Asset Management, added: “With recent data showing contracting economic growth, cooling average earnings and unemployment at its highest since early 2021, the scene would appear perfectly set for the Bank of England to cut rates tomorrow.
“Inflation dropping to 3.2% provides reassurance that this could come to fruition. While CPI remains above the Bank’s 2% target, signs that price pressures are easing make inflation less of a threat to the economy.
“The greater danger now is that monetary policy remains too restrictive for too long as economic momentum continues to fade. With growth contracting, the balance of risk is shifting toward the need for support, rather than further restraint.
“It’s therefore all eyes on the Monetary Policy Committee as they judge whether today’s print is enough to justify action."
