UK inflation falls to 10.7% as petrol prices drop – what it means for your money

THE UK’s rate of inflation fell to 10.7% in November as petrol prices dropped.

The data from the Office for National Statistics (ONS) reveals the annual rate has gone down from 11.1% in October.

Inflation is a measure of how the price of goods and services have changed over the past year. 

Prices are still rising but at a slower rate than last month when they were rising at their fastest in 41 years.

The ONS said that a drop in the price of fuel was part of the reason for the fall, but that was off-set by increases for alcohol in restaurants, cafes and pubs.

Grant Fitzner, ONS chief economist, said: “Although still at historically high levels, annual inflation eased slightly in November.

“Prices are still rising, but by less than this time last year, with the most notable example of this being motor fuels.

“Tobacco and clothing prices also rose, but again by less than we saw this time last year.

“This was partially offset by prices in restaurants, cafes and pubs, which went up this year compared to falling a year ago.”

Petrol prices hit a record high over the summer but have since fallen, easing pressure on motorists.

Overall, the ONS said fuel prices rose by 17.2% in the year to November 2022, down from 22.2% in the year to October.

It follows the news yesterday that regular pay in real terms fell by 2.7% in August to October.

Chancellor Jeremy Hunt said inflation was “the number one enemy”.

Mr Hunt said that the aftershocks of the invasion of Ukraine mean high inflation is “plaguing” economies across Europe and that tackling it is his “top priority”.

Meanwhile, official data earlier this week revealed the economy grew by 0.5% in the month to October.

However, the ONS said the three months to October saw the economy drop by 0.3% compared with the previous three months.

Alice Haine, personal finance analyst at Bestinvest, said that the fall in inflation “will offer little comfort” to consumers.

Ms Haine said: “At 10.7%, inflation remains more than double the 5.1% recorded in November 2021 and more than five times the Bank of England’s target of 2% highlighting just how squeezed disposable incomes have become over the past year.” 

Today’s figures come ahead of the Bank of England’s interest rate decision tomorrow, where it is expected to raise rates in a bid to tackle inflation.

The Bank is poised to increase rates by 50 basis points from 3% to 3.5% on Thursday.

The move will make the cost of borrowing, including loans, credit cards and mortgage repayments more expensive.

Although it’s good news for savers as they may get better rates on their nest egg.

What does it mean for my money?

Falling inflation indicates that the cost of goods and services are still rising but at a slower rate.

Inflation rose to 11.1% in October, and with the rate now at 10.7%, your cash will go slightly further.

Prices on everyday items such as food are still surging.

The latest figures show food prices are up by 16.5% on last year – so your money will not get you as much in the supermarket.

According to the ONS the biggest factor pushing up costs came from breads and cereals.

But, a slowing in rise in the cost of fruit partially off-set the increase.

Energy bills are still painfully high, despite government support.

It will mean that households face paying more when it comes to personal spending on food, but also energy, and household bills.

Worker’s wages are also stagnating, as they fail to keep pace with soaring inflation.

High inflation means that more of people’s income is being spent on living costs, making them feel worse off even if they get a pay rise.