Economists evaluate inflation that fell more than expected

According to data released in the country today, annual inflation, which was 4.6 percent in October, came in at 3.9 percent in November. The expectation was for annual inflation to be 4 percent in November.

Thus, inflation has fallen to its lowest level since October 2021, when it was measured at 4.2 percent. On a monthly basis, inflation fell by 0.2 percent.

Core inflation, which excludes food and energy prices, showed a decline to 5.1 percent on an annual basis in November, compared to 5.7 percent in October.

Services sector inflation, which is closely monitored by the Bank of England (BoE) for monetary policy decisions, was 6.3 percent on an annual basis. Services sector inflation was measured at 6.6 percent in October.

"COULD LIMIT STERLING SELL-OFFS"

Swissquote Bank Senior Analyst Ipek Ozkardeskaya pointed out that despite the decline in inflation, the current core inflation rate is still more than double the 2 percent target set by the Bank of England.

Ozkardeskaya stated, "If investors continue to pull out of the US dollar due to softening Fed expectations, the Bank of England's hawkish expectations could limit sell-offs in sterling."

Panmure Gordon Chief Economist Simon French said, "It is highly likely that inflation will fall significantly in the second half of 2023. Real income growth is expected in 2024."

Investec UK Economist Sandra Horsfield stated that the possibility of the UK declaring victory against inflation compared to the US and the Eurozone is still low, noting, "Both countries have visibly closer inflation targets and lower core inflation."

Horsfield said, "The distress this situation causes for households in the UK is very clear. The Bank of England is also well aware of this."

Horsfield stated, "We expect to see more evidence that inflation is falling again this month, but this progress is likely to be quite gradual."

Hargreaves Lansdown Head of Retirement Analysis Helen Morrissey also pointed out that core inflation in the country has fallen to its lowest level in the last two years, saying, "After years of relentless pressure on household budgets, such a decline will bring real relief."

Inflation in the UK peaked at 11.1 percent in October 2022.

Despite the decline, inflation in the country remains high compared to the European Union and some G7 countries.

While the BoE aims to bring inflation down to 2 percent, it is projected that this level could be reached by the end of 2025.