UK inflation remained at the lowest level in three years in November despite rising prices for a variety of goods including chocolate, concert tickets and package holidays.
The Office for National Statistics (ONS) said the consumer prices index (CPI) held steady at 1.5% last month, the same level recorded in October, as the annual increase in some prices was offset by falling prices elsewhere, including for cigarettes and hotel rooms.
Rate-setters at the Bank of England are preparing to meet on Thursday as speculation mounts that they will cut interest rates soon, with the British economy faltering and inflation remaining below the Bank’s 2% target.
Threadneedle Street’s monetary policy committee was divided last month on whether to lower borrowing costs, with two of the nine-strong team voting for a 0.25% cut from the 0.75% base rate. City economists are anticipating the same outcome again on Thursday.
David Cheetham, the chief market analyst at the online financial trading firm XTB, said: “There are growing calls that the Bank may be set to loosen policy in the coming months, although the key determinant will likely be how they view the election result and what this means going forward.”
Growth in the British economy has stalled in recent months at a time of intense Brexit uncertainty and political gridlock in the run-up to the election. Although stock markets initially roared ahead after Boris Johnson’s landslide victory, City investors have grown more cautious as the prime minister sets a hardline stance over agreeing a trading relationship with the EU within a year.
Business leaders have warned the deadline for the transition period at the end of December 2020 would represent another Brexit cliff edge likely to deter business investment in Britain.
The National Institute of Economic and Social Research said the rising price of food and drink contributed most to inflation in the year to November, but those increases had been offset by slight falls in alcohol, tobacco and clothing prices.
At a regional level, NIESR found inflation was highest in the north, at 1.5%, and lowest in the south-west at 0.7%.
UK house price growth slowed to its lowest annual rate in more than seven years, dragged down by falling prices in London. House prices continued to grow across Northern Ireland, Wales and Yorkshire.