Boost for families at Christmas as inflation sticks to its three-year low
INFLATION held at a three-year low after a slowdown in cigarette price increases was offset by more expensive concert tickets.
Figures from the Office for National Statistics (ONS) showed the Consumer Price Index was 1.5% last month, flat from the rate in October. Inflation was last lower in November 2016.
However, inflation was higher than analysts had predicted, having forecast a decrease to 1.4% for the month.
Nevertheless, inflation remains below the Bank of England’s 2% target rate.
Mike Hardie, head of inflation at the ONS, said: “The headline rate of inflation remained steady, with prices rising across a variety of goods and services such as chocolate, concert tickets and package holidays, offset by falling hotel costs and cigarette prices rising substantially slower than this time last year.”
Tobacco prices significantly weighed down on inflation, with the cost of cigarettes rising by just 0.1%.
This was compared to a 3.4% rise in November last year.
It came after a rise in tobacco duty was not implemented in October, as has happened in previous years.
Inflation was also pressed down by cheaper hotels, with the price of accommodation dropping by 2% in November.
The ONS said price increases in the recreation and culture sector significantly offset this impact.
It added that the upward pressure was particularly driven by higher concert tickets after a number of major UK tours were announced during the month.
Package holiday prices also increased.
Meanwhile, the price of food increased by 1%, with the cost of chocolate and confectionery jumping higher.
There was also a 2.4% rise in the price of fruit, and the cost of meat rose 0.9%.
Elsewhere, clothes prices had a downward pressure as greater discounting resulted in a slowdown in price growth.
The Retail Prices Index, a separate measure of inflation, was 2.2% last month, rising from 2.1% in October.
The Consumer Price Index including owner-occupiers’ housing costs — the ONS’s preferred measure of inflation — was also 1.5% in October, remaining flat from November.
Chancellor of the Exchequer Sajid Javid welcomed the inflation figures.
“Christmas can be an expensive time of year, so it’s great that low inflation will help people’s cash go further,” he said.
“We are determined to tackle the cost of living by supporting hard-working families to secure good, rewarding jobs and keep more of their own money.”