UK CPI Inflation Falls to 0.30% pa

Published / Last Updated on 16/12/2020

Last month when inflation ticked up to 0.7% pa, we suggested it would not be for long and indeed it was not.  The UK headline inflation rate, the Consumer Prices Index (CPI) published by the Office for National Statistics today was just 0.3% pa in November 2020 which is down from 0.7% pa for October.

November’s largest upwards price contributor was recreation and culture (0.24 percentage points).

The largest downward price contributors were clothing, food and non-alcoholic beverages of 0.17 and 0.09 percentage points.

These were partially offset by upward contributions from accommodation services, games, toys and hobbies.

Looking at CPIH, The Consumer Prices Index including owner occupier’s housing costs resulted in 12-month inflation rate fall in November 2020 to 0.6% pa, down from October 2020 of 0.9% pa.

72 CPIH items were unavailable in November due to the increased restrictions cause by the coronavirus pandemic, which accounted for 13.9% of the basket weight. 


The result we always look for and is no longer used for state benefit calculations but does have a huge effect on many company pension payments and also government index linked gilt borrowing costs is the Retail Prices Index (RPI), which was 0.9% pa for November, down from 1.3% pa in October.

Is it any wonder that the Bank of England is buying back higher fixed rate gilts in the form of quantitative easing to then borrow again at such low rates of say 0.25% pa when inflation is low and Bank of England base rates are just 0.1% pa.  It is a little like the zero interest balance transfer credit cards.

The Bank of England Monetary Policy Committee is due to meet tomorrow and with inflation at just 0.3% pa, they cannot afford for inflation to go negative as the economy woould grind to a standard as, for example, the television that you could buy today will be cheaper next month so consumers put off spending.  We expect interest rates to go to zero or negative either tomorrow or in January.


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