A day after encouraging data released by the US, a similar trend was witnessed in the UK where inflation slowed down by 0.4 percent in November when compared with the previous month.
The data from Office for National Statistics on Wednesday showed that inflation in the UK came in slightly below expectations at 10.7 percent in November, as cooling fuel prices helped ease price pressures. However, high food and energy prices continued affecting the households and businesses.
In the US, the CPI, which measures a wide basket of goods and services, rose just 0.1 percent from the previous month, and increased 7.1 percent from a year ago.
Experts in the UK were projecting an annual increase in the consumer price index of 10.9 percent in November after it reached a 41-year high of 11.1 percent in October.
In October, the monthly increase was 2 percent in October, however, the rate slowed down to 0.4 percent but remained below a consensus estimate of 0.6 percent.
Meanwhile, the Office for National Statistics said the largest upward contributions came from “housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.”
The largest downward contributions over the month came from “transport, particularly motor fuels, with rising prices in restaurants, cafes and pubs making the largest, partially offsetting, upward contribution.”
The Bank of England will announce its next monetary policy move on Thursday with a widely expected raise by 50 basis points in interest rate at a time when the country faces widespread industrial action over the Christmas period when workers strike to demand pay rises closer to the rate of inflation and better working conditions.
On a depressing note, the Office for Budget Responsibility projected that the UK would suffer the largest fall in living standards since records began, as real household income is expected to decline by 4.3 percent in 2022-23.
Finance Minister Jeremy Hunt last month announced a sweeping $68 billion fiscal plan, including a slew of tax rises and spending cuts, in an attempt to plug a substantial hole in the country’s public finances.
Although the dip in Wednesday’s figures is a step in the right direction, the persistent problem of rising food prices and household energy bills remains a thorn in the side of the British economy, experts say.
However, inflation may finally be passing its peak, after the US also posted a better-than-expected CPI print on Tuesday.
The Bank of England faces a tricky task in trying to drag inflation back towards its 2 percent target while remaining cognizant of a weakening economy. This was evident in the latest UK labour market data earlier this week, which showed an uptick in both unemployment and wage growth.
The market is pricing a 50 basis point interest rate hike from the Bank of England on Thursday, taking the benchmark rate to 3.5 percent. Policymakers have signaled a potential slowing of the pace of hikes in 2023. However, inflation remains well above target.