Inflation in the UK dropped slightly to 10.7 per cent in November, from a 41-year high of 11.1 per cent in October, according to data from the Office for National Statistics.
Economists expected a figure of 10.9 per cent and there is now speculation that inflation has peaked.
“The fall in inflation last month supports our view that we have likely passed its peak,” said Alpesh Paleja, lead economist at the Confederation of British Industry.
“We expect inflation to continue falling gradually over the year ahead as global price pressures ease and an economic downturn takes some of the heat out of price setting.”
Others are more cautious about predictions that the November figure is the highest point in the current economic cycle.
“Some may be calling this a peak; it is, I think, too early,” Grant Fitnzer, chief economist for the ONS, told the BBC. “We’ve only seen one fall from a 40-year high, so let’s wait a few months.”
Strikes and pay demands
The fall in inflation comes as the UK suffers its second day of national rail strikes, in a dispute over pay and conditions, which have brought the country's rail network to a halt.
The British government has insisted it cannot afford to give public sector workers pay rises that keep pace with inflation, and the average pay offer has been 5 per cent.
Alongside rail staff, strikes are also being held by nurses, ambulance drivers, postal workers and civil servants.
"Getting inflation down so people's wages go further is my top priority, which is why we are holding down energy bills this winter through our energy price guarantee scheme and implementing a plan to help halve inflation next year," UK Chancellor Jeremy Hunt said
"I know it is tough for many right now but it is vital that we take the tough decisions needed to tackle inflation ― the number one enemy that makes everyone poorer. If we make the wrong choices now, high prices will persist and prolong the pain for millions." he added.
The opposition Labour Party's shadow chancellor Rachel Reeves said: "The question people across Britain will be asking themselves this morning is: 'Do I and my family feel better off under the Tories? The answer will be no."
Food and fuel
The largest contribution to downward pressure on inflation came from transport, particularly motor fuels and second-hand cars, the ONS said. Rising prices in restaurants and cafes provided the greatest upward pressure.
All eyes now turn to the Bank of England's decision on interest rates on Thursday.
"The Bank of England will be concerned that food inflation remains particularly high, running at an annual rate of 16.4 per cent, according to today’s data, and still rising. On balance we still think the bank should continue to raise rates, albeit slightly, until the downward path of inflation is firmly entrenched in business expectations,” said Kitty Ussher, chief economist at the Institute of Directors.
Small businesses still struggling
While the dip in the inflation numbers will come as some relief to small businesses, many still face tough times ahead. A survey on Tuesday showed that one in 10 fear bankruptcy if the crucial Christmas trading period does not go well.
"With their margins left razor-thin, very few SMEs [small and medium enterprises] are planning to increase investment as they deal with a wall of higher energy bills, input costs, interest rates and taxation," said David Bharier, head of research at the British Chambers of Commerce.
"Over half of SMEs tell us they will struggle to pay their electricity and gas bills after April.
"They will be nervously awaiting the government's expected announcement on the future shape and extent of any energy costs support, which will also impact inflation."
Interest rates
While the fall in inflation in November may come as a relief, analysts feel it will have little effect on the Bank of England's next decision on interest rates, due on Thursday.
"Inflation is still lingering in the ballpark of a 41-year high, and over five times the BoE’s target of 2 per cent. There is still a long way to go before any meaningful talk of rate cuts take place." said Srijan Katyal, global head of strategy and trading services at ADSS.
Most economists expect the Bank of England's Monetary Policy Committee to increase interest rates from 3 per cent to 3.5 per cent.
“While interest rates are now expected to peak at a lower than previously feared 4.5 per cent next year, mortgage rates are not likely to jump up significantly as rate increases have already been priced in," said Alice Haine, personal finance analyst at Bestinvest.
The Bank of England said on Tuesday that because of the cost-of-living crisis in the UK, about four million households are likely to face higher mortgage payments next year, and that 2.4 per cent of them would find mortgage payments hard to afford.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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The Greatest Royal Rumble card as it stands
The Greatest Royal Rumble card as it stands
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WWE World Heavyweight ChampionshipAJ Styles (champion) v Shinsuke Nakamura
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57kg quarter-finals
Zakaria Eljamari (UAE) beat Hamed Al Matari (YEM) by points 3-0.
60kg quarter-finals
Ibrahim Bilal (UAE) beat Hyan Aljmyah (SYR) RSC round 2.
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67kg quarter-finals
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Ilyass Habibali (UAE) beat Ahmad Hilal (PLE) by points 3-0
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Singham Again
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Scores
Day 2
New Zealand 153 & 56-1
Pakistan 227
New Zealand trail by 18 runs with nine wickets remaining
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'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
