UK inflation fell by more than expected in the year to November, to 3.9%, its lowest level in two years.
The drop in the Consumer Prices Index rate was driven by falling fuel and food prices, but is still almost double the Bank of England’s target of 2%.
The Office for National Statistics said that food is still 9% more expensive in the UK than it was a year ago, however. And while energy costs are down, many households will pay more this year as there is no government financial support for bills in place.
Figures published today by pay analysts at XpertHR showed that the median basic pay award in the three months to November was 6%, with predictions that pay awards may also fall in line with inflation in the coming months.
Chancellor Jeremy Hunt said the latest figures set the UK “back on the path to healthy, sustainable growth”, but that the government would continue to prioritise measures that help with cost of living pressures.
UK inflation still remains higher than in other countries including the US, France and Germany.
Andy Mielczarek, founder and CEO of SmartSave, a Chetwood Financial company, said that many people would breathe a sigh of relief, “grateful for a little respite from the cost-of-living crisis”.
Next year, he added, could see employees keener to save more of their earnings as rates improve.
“For much of the past two years, money in savings accounts was losing value in real terms due to increasing inflation.
“Now, the situation has been reversed, with inflation falling below the base rate, affording those keen to save or invest their money the opportunity to reconfigure their financial strategies.”
Shadow chancellor Rachel Reeves said working people were still “worse off”, however, due to the “economic failure” of the Conservative government.
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