"The risk of inflation coming through in a vicious loop of wage rises and price rises is most likely years away, and the economy has to make up the lost output gap first."
CPIH inflation, the ONS' headline measure which includes owner occupiers’ housing costs, fell from 0.9% in October to 0.6%.
The largest contribution to the CPIH 12-month inflation rate in November came from recreation and culture.
Falling prices for clothing, and food and non-alcoholic beverages resulted in the largest downward contributions.
James Lynch, fixed income investment manager at Aegon Asset Management, commented: "Today's surprise drop in inflation chimes with our view that we cannot see inflation being an issue in 2021, because we don't have the conditions in place to warrant that.
"The risk of inflation coming through in a vicious loop of wage rises and price rises is most likely years away, and the economy has to make up the lost output gap first. It is some gap to make up, with GDP expected to be around 11% lower this year.
"Supply side inflation is possible, especially as the ‘just in time’ economy that we rely on requires a seamless supply chain. We have seen the fragility of this over the past couple of weeks, whether that be Covid-19 issues impacting the supply chain, or Brexit stockpiling.
"If that breaks down we could get a supply side shock and therefore prices could be put up as the demand exceeds the supply. But even this should be temporary, and should not cause a long lasting inflationary impulse."
Richard Pearson, director at investment platform EQi, added: “Inflation has had the wind knocked out of its sails again at what was supposed to be a critical time for retail, but in fact was coloured chiefly by a renewed lockdown in England. Falling clothing and food prices will reflect some discounting efforts while shoppers were stuck at home, but the index remains well below the Bank of England’s target.
“The ONS itself said thanks to the lockdown some 14% of all the items it measures for the basket were unavailable, yet again making this measure a tricky one to be sure of. Any fall in prices is good news for consumers as we enter the holiday period, but Brexit looms and with it a potential shock to supplies of imported goods which could stoke inflation for reasons totally unrelated to the coronavirus crisis.
“Savers might take comfort from these numbers, that even though their money isn’t earning much interest in the bank, inflation isn’t eating away at their deposits. They would do well to not rest on their laurels though and consider putting their money to better use.
“2021 could see inflation bounce back with a vengeance. A Brexit supply shock and rapidly reheating economy, pumped up by the vaccine, will almost certainly create material price rises as demand reignites.”
