UK Inflation Falls to 3.9% pa in November 2023

Published / Last Updated on 20/12/2023

The Office for National Statistics (ONS) has this morning (7am) released Consumer Prices Index (CPI) inflation figures for November 2023 and it has fallen to 3.9% pa, a fall of 0.7% from October 2023 (4.6% pa) and a huge fall of 2.8% since September 2023 (6.7% pa).

We have all been expecting the trend of price increases slowing down to continue but at 3.9% pa, it is a bigger fall than anticipated with inflation now at its lowest point for 2 years.

The slowdown in price rises came across all sectors except for restaurants and hotels.  Transport costs were the biggest downward contributor as petrol prices hit a two-year low closely followed by recreation and culture (as we stayed indoors due to inclement weather) as well as food and non-alcoholic beverages (likely due to lower transportation costs).  Housing, associated housing costs and communications remain stubbornly high although we expect communication cost rises to slow as ‘inflation + X%’ tariff increases slow down but mortgages/rents will remain high for the foreseeable future as interest rates are unlikely to fall dramatically over the coming year.

The old measure of inflation RPI, an arithmetical mean of the average prices of a basket of household spending (rather than the geometric mean for CPI) fell 0.8% to 5.3% pa in November (3.4% lower than it was 2 months ago).  We prefer RPI as a measure as it tells us that things are still tight when looking at whole expenditure but we understand the Government’s desire not to use RPI as an official national statistic because it would become a ‘vicious circle’ if the Bank of England was using RPI as the benchmark to judge increasing interest rates to bring inflation down because any increase in interest rates would, by default, push RPI up.


Lower inflation will bring ‘glad tidings’ as we enter the festive season for both the Bank of England and the Government, no doubt Chancellor Jeremy Hunt and Prime Minister Rishi Sunak will be claiming plaudits, but we suspect tougher numbers are still to come as it will be difficult to get down to trend inflation of 2.0% pa in 2024.

BP's oil freight (along with many freight companies in other industries) has suspended passage for its tankers through the Red Sea meaning delays on fuel supplies may increase prices as it will be the long way around the Cape of Good Hope (South Africa) on their journey back to Europe.  This should only have a temporary impact when the route is ‘in sync’ and supplies land regularly again, but we suspect there could be a spike in December or January’s inflation for transport costs and other goods from the Far East.

Next UK inflation report: 17th January 2024.

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