In a welcome surprise for households and policymakers, the pace of price rises across the United Kingdom slowed significantly more than anticipated last month. Official figures released today reveal that inflation has fallen to its lowest point in eight months, dramatically increasing the likelihood of an imminent cut in interest rates.
Sharp Slowdown in Price Rises
Data from the Office for National Statistics (ONS) shows the annual rate of consumer price inflation (CPI) dropped to 3.2% in November. This marks a substantial decrease from the 3.6% recorded in October and undershoots forecasts. Economists at the Bank of England had predicted a fall to 3.4%, while financial markets expected a figure of 3.5%.
Perhaps even more telling is the monthly movement. The Consumer Prices Index fell by 0.2% between October and November 2025. This represents the most significant monthly decline in prices since July of the previous year, indicating a clear cooling of inflationary pressures.
The Surprising Role of Food Prices
The primary driver behind this unexpected slowdown was a notable decrease in the cost of food and non-alcoholic beverages. Prices for everyday staples such as bread, cereals, cakes, and biscuits fell during November, which is highly unusual for the time of year when seasonal trends typically push costs higher.
While food prices provided the largest downward pull, the data showed a mixed picture across other sectors. Inflation for recreation and culture held steady, but there was a notable easing in services inflation, which dipped to 4.4%. This key measure of domestic price pressure also came in below the central bank's previous projections.
Implications for Interest Rates and the Economy
The sharper-than-expected fall has had an immediate impact on financial markets. Traders now see a 90% probability that the Bank of England's Monetary Policy Committee (MPC) will cut the base rate by 0.25% when it announces its decision on Thursday. This would be the first cut in the current cycle.
Analysts suggest that the combination of rapidly cooling inflation, weaker economic growth, and a rising unemployment rate is creating a compelling case for the Bank to begin easing its restrictive monetary policy. However, industry bodies were quick to note that despite the positive direction, inflation remains stubbornly above the Bank's 2% target, indicating the journey back to price stability is not yet complete.
The upcoming MPC meeting on Thursday, 18th December 2025, is now one of the most keenly watched in recent months, with millions of mortgage holders and businesses awaiting a signal that the high-interest rate era may be starting to draw to a close.
