FX.co ★ UK Inflation Rate Falls More than Expected

In November 2025, the UK's annual inflation rate eased to 3.2%, marking an eight-month low, down from October's 3.6% and below the anticipated 3.5%. This figure also undercuts the Bank of England's 3.4% forecast. A significant factor in this decline was the reduction in prices for food and non-alcoholic beverages, down to 4.2% from 4.9%, with notable decreases in bread and cereals, including cakes, biscuits, and breakfast cereals. Alcohol and tobacco prices also saw a deceleration, dropping to 4% from 5.9%, the lowest since December 2022. Further slowdowns were noted in transportation costs, which dipped to 3.7% from 3.8%, and housing and utilities, which decreased to 5.1% from 5.2%, with actual rental prices settling at 3.8%, down from 4.1%. Services inflation decreased slightly to 4.4%, just below the central bank's 4.5% projection. Additionally, costs for clothing and footwear notably decreased by 0.6%, reversing from a previous increase of 0.3%, largely driven by reductions in women's clothing prices. Meanwhile, recreational and cultural expenses maintained a steady rise of 2.9%, consistent with October's rate. On a month-to-month basis, the Consumer Price Index (CPI) experienced a 0.2% drop, marking the most significant reduction since July 2024.