Inflation fell in November, according to the latest official data released by the Office for National Statistics (ONS) today.
The consumer prices index (CPI) measure of inflation dropped back from 5.0 per cent to 4.8 per cent and the retail prices index (RPI) which includes the cost of mortgage interest repayments lowered to 5.2 per cent from 5.4 per cent in October.
The drop was expected as the influence of the high rises in utility costs subsided after the massive price hikes seen in September. Food prices have also retreated from their highs of earlier in the year, partly due to a supermarket price war in the run up to Christmas.
A statement from the ONS said: "The largest downward pressures came from food, petrol, clothing and furniture, household equipment & maintenance. Partially offsetting these were upward pressures from increases in the cost of domestic heating and off sales of alcohol."
It is expected that inflation will continue to fall in 2012 as the effect of the increase in VAT to 20 per cent drops off in January.
The Bank of England target for inflation is two per cent and the Bank has repeatedly said over the last six months or so that they expected inflation to rise to five per cent before dropping back sharply in 2012, possibly to below the two per cent target by the end of 2012.
Howard Archer, Chief UK & European Economist at IHS Global Insight said: “Inflation should dip particularly sharply at the start of 2012 as the impact of the January 2011 VAT hike from 17.5% to 20% drops out. It is highly possible that consumer price inflation will be down to the Bank England’s target level of 2.0% by the end of 2012, and it could very well dip below 2.0% in 2013.
"It was particularly welcome news to see core inflation retreating to 3.2% in November from 3.4% in October. There was a marked easing back in the annual increase in clothing and footwear prices, and it is evident that a number of retailers stepped up their discounting and promotions in November as their Christmas sales got off to a slow start."
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