UK inflation dips but cost of living remains high

UK inflation dipped to 10.7 per cent from 11.1 per cent in November, as lower petrol prices helped to ease the rate of price increases.

According to the Office for National Statistics (ONS), falling motor fuel prices led the decline in the consumer prices index (CPI) measure of inflation.

Overall, fuel prices rose by 17.2 per cent in the year to November - down from 22.2 per cent in the year to October, the ONS said.

Meanwhile food prices continued to rise, with annual food inflation hitting 16.5 per cent - the highest rate for 45 years - up from 16.4 per cent in October.

The ONS said the largest upwards contribution to the inflation number last month came from rising prices in restaurants, hotels, cafes and pubs - led by alcoholic drinks.

The rate of inflation in this area of the hospitality sector is now running at its highest level since 1991, the ONS added.

Erin Henwood (pictured), policy advisor at Greater Birmingham Chambers of Commerce, said: “Businesses and households alike will be hoping that the battle against soaring prices has begun to ease, with inflation falling slightly in November.

“However, figures revealed this week emphasise that the UK economy is not out of the woods just yet, with the Office for National Statistics revealing earlier this week that economic activity fell between August and October.

“Following the Chancellor 's warning that the economic situation will worsen before it improves, all eyes will be on the Bank of England 's Monetary Policy Committee as they meet tomorrow to lay a marker for monetary policy as the cost of doing business crisis continues to bite for firms up and down the country.

“This is a critical trading period for many businesses across the country, and thus sensible fiscal intervention is needed from Government to provide much-needed reassurance for businesses and to give them the confidence that they need to plan ahead for 2023. ”