UK inflation declines from 41-year high but food prices continue the upswing

British inflation declined much more rapidly than anticipated in November to 10.7 per centfrom the 41-year high of 11.1 per cent according to official consumer pricing data, which may provide some comfort to the Bank of England and hard-pressed households. Consumer price inflation was expected to fall to 10.9 per cent as per economists surveyed by Reuters. Last month, both the USand Euro zone inflation rates dropped far more sharply than expected, fuelling hopes that the current inflation wave may have reached its apex.

"Prices are still rising, but by less than this time last year with the most notable example of this being motor fuels," the Office for National Statistics' chief economist, Grant Fitzner told Reuters.

The Bank of England ( BoE) hassharply increased interest rates over the past 12 months in an effort to tackleinflation that is significantly higher than its two per centtarget. Most economists anticipate that it will increase rates once again on Thursday, to 3.5 per centfrom threeper cent.

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The government's budget watchdog anticipated the worst pressure on living standards since records began in the 1950s, while the BoE forecasted that Britain will enter a protracted recession with inflation not returning to target until early 2024.

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British inflation started to take shapelast year, mostly driven by post-pandemic congestionin the domestic and global economy, and acceleratedparticularly when European energy prices surged after Russia's February invasion of Ukraine. The BoE has also shed lightlabour shortages and trade and migration frictions due to Brexit as playing a role in pushing up prices.

(With inputs from agencies)

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