UK inflation fell to 3.2% in November, marking a sharper-than-expected slowdown driven largely by lower food prices. While price pressures in the service sector remain elevated at 4.4%, the overall easing in inflation is expected to provide the Bank of England with the final reassurance needed to deliver an interest rate cut in December.
Experts are reacting to the latest UK inflation data below:
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK inflation figures:
“As Christmas gifts go, this is a most welcome one. It’s the time of year when people put a few more things in their supermarket trolley, so news that food and alcohol inflation has fallen will be a boon for cash strapped families.
“Inflation has proved stubbornly resilient over the course of the year but there are signs that we’ve scaled the sneaky second peak. Although 3.2% is still way above the Bank of England’s target, it is expected to be the final piece in the puzzle which will enable rate setters to deliver their own festive gift to borrowers with an interest rate cut on Thursday.
“Service sector inflation will certainly be an area of concern, with the cost of eating and staying out elevated as businesses attempt to deal with last year’s Budget measures which increased labour costs.
“Whilst the energy price cap will nudge up a tiny bit in January, the price help for households announced in this year’s Budget should provide a significant counterweight, and rising unemployment is already a factor keeping pay rises at a more subdued level.
“There are still massive question marks about what 2026 will bring and markets don’t expect the Bank of England to cut interest rates more than once or twice over the next year, so borrowers hoping to see a return to the ultra-low levels many people had become used to will have to adapt.
“What we must remember is that falling inflation doesn’t mean the cost of living is getting cheaper, and many households are still reeling from the impact of the mega price hikes we’ve endured over the past few years. But the bigger than expected fall in headline CPI is good news and will help boost people’s spending power and confidence. And with so much of the UK economy reliant on household spend, it could also signal better news for the UK’s flatlining growth.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“The sharp drop in inflation in November means that a cut in Bank Rate tomorrow is all but certain. While the vote might still be close, it is not very hard to see where a majority comes from to keep policy on hold, especially given the soften of food inflation in this report, given the importance some policymakers have placed on food prices as a driver of household inflation expectations. Inflation is set to fall further next year due to mechanical base effects and policy announcements in the recent budget. This should keep rates falling through 2026, after the cut this week.”
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, said:
“Today’s lower than expected inflation figure of 3.2% shows that price pressures are continuing to ease. This moderation is being driven partly by weaker economic activity and a softer labour market – developments that aren’t positive for growth or jobs but are helping to take some heat out of inflation. Against that backdrop, the Bank of England is likely to feel more confident that disinflation is taking hold as it approaches its closely watched rate decision later this week, with a cut now widely expected.
“For households, however, lower inflation doesn’t automatically translate into lower living costs. Many people are still feeling the cumulative impact of several years of price rises, particularly for essentials that rarely fall back quickly. Even as inflation cools, people continue to reassess how far their income stretches and whether their current spending remains sustainable.
“For those already in retirement, the picture is mixed. While easing inflation helps protect the real value of fixed incomes, it also means interest rates – and therefore returns on cash savings – are likely to fall, which can reduce income from short-term deposits. For those saving for, or drawing an income in retirement, stability and predictability matter most. Savers want to understand how changes in inflation and interest rates affect their longer-term plans, without feeling the need to react to every move from the Bank. While cash plays an important role for short-term needs, it’s also worth remembering that it rarely keeps pace with inflation over the long term. Maintaining a steady, long-term approach to pensions and investments can help protect the real value of money and keep people on track, even in a more uncertain economic environment.”
Joseph Greif, Investment Director at wealth management firm Evelyn Partners, comments:
“This report follows on from yesterday’s UK employment data, which also showed average earnings cooling alongside a rise in the unemployment rate to 5.1%. A backdrop of weaker hiring plus more available workers can often lead to a decline in overall wage growth, supporting this disinflationary momentum.
“A continued decline in CPI from the late summer highs of 3.8% represents an early Christmas present for the Bank of England but given that the current level remains1.2% away from the 2% target level there is still some work to be done. If this downward trajectory in inflation continues the BoE’s inflation forecasts that project a 2% headline inflation by summer 2027 may well prove accurate.
“Tomorrow, the Bank of England hold their final Monetary Policy Committee (MPC) meeting of 2025, with an overwhelming consensus expecting a 0.25% cut which would bring the policy rate to 3.75%, matching that of the US Federal Reserve. Today’s continued decline in CPI will help reduce any lingering concerns that some MPC members might have had about continuing to lower interest rates.”
Richard Pike, on the latest inflation figure:
“The latest CPI figures are welcome news for squeezed households with price pressures slowly easing and increase the likelihood of a base rate cut at tomorrow’s MPC meeting. We’ve seen markets pricing this in over the past few weeks with gradual reductions in fixed mortgage rates, and I’d be surprised if we don’t see a quarter per cent reduction.
“Inflation appears to be on a downward trajectory, although it still has some way to go to meet the Bank of England’s two per cent target. This is improving sentiment in the market, and we saw this reflected in the most recent lending figures from the Bank of England. The outlook looks positive for the mortgage market going into 2026, as long as growth strengthens and the job market starts to pick up.”
Nathan Emerson, CEO of Propertymark, comments:
“With the cost of living remaining at the forefront of people’s minds throughout 2025, today’s news may provide people with a degree of confidence that inflation is gradually trending in the right direction.
“However, we still have some clear distance to go before inflation is back down at 2%, which, of course, is where the Bank of England has set its sights.
“In real terms, this metric remains extremely influential regarding base rate decisions for which we will see the Bank of England decide tomorrow afternoon. Any combination of inflation dropping and potential base rate cuts would always be welcome news for those on the property ladder, and even more so for people considering making their first steps to purchase a home.”
Lindsay James, investment strategist at Quilter:
“With Christmas right around the corner, consumers are still having to contend with the UK’s inflation problem just as the shopping list grows and hosting duties commence. Whilst UK inflation may have fallen to 3.2%, down from 3.6%, a decent fall compared to last month, the UK continues to be an outlier compared to European peers. There is little Christmas cheer as inflation remains well above the Bank of England’s 2% target while economic growth grinds to a halt.
“The good news is that energy costs have stabilised compared to last year and are likely to fall further as providers promise to pass on the £150 saving by moving some levies to general taxation. A weaker economy combined with earlier policy measures has also dampened wage growth, a key input into service inflation which has fallen slightly to 4.4%.
“However, it is the Christmas staples of turkeys, alcohol and chocolate that consumers will be caring about the most. Thankfully food and drink made the biggest downward contributions. Grocery inflation will be watched closely as it is an important factor in the Bank of England’s interest rate setting given the influence that food prices have on overall inflation expectations. Today’s news could just give it enough cover to cut more than expected.
“For now, though, an interest rate cut tomorrow does seem to be on the cards following really poor GDP figures last week. There are growing signals that inflation will fall more sharply next year, reflected in the Bank of England’s own projections which has CPI at 2.5% by the end of 2026, a largely mechanical outturn from measures in the Budget such as the rail fare freeze and that removal of certain green levies on household energy bills alongside a falling contribution from fuel. However, these forecasts also suggest flatlining GDP growth and a stable rate of unemployment, with risks now arguably growing on the downside.
“Should the UK slide into recession this could accelerate the downward path of inflation and with it the potential for rate cuts, but at considerable cost not only to the country but also to its political leaders. The Christmas cheer has run out for the UK economy.”
Kevin Brown, savings expert at Scottish Friendly, has commented:
“A fall in inflation is a clear sign that price pressures are finally easing and will be taken as welcome reassurance by policymakers. After a prolonged period of stickiness, today’s data strengthens the case that inflation is now moving sustainably in the right direction.
“Taken together with slowing wage growth and a weakening economy, a rate cut this week now looks nailed on. And we expect at least one, but possibly two further rate reductions over the coming 12 months.
“For borrowers, this is the most encouraging backdrop they’ve seen in a while. Falling inflation and lower interest rate expectations should continue to feed through into more competitive mortgage pricing, which will benefit those coming to the end of fixed-rate deals.
“As for savers, it means the best rates won’t be around for long – so now could be the time to act. And for those looking to improve their chances of outpacing inflation, investing remains the more effective option to provide the potential for greater returns over the long term.”
Caitlyn Eastell, Spokesperson at Moneyfactscompare.co.uk, said:
“Although mortgage rates remain significantly higher than the ultra-low levels seen in previous years, lenders have been drip feeding cuts as inflation eases, fuelling speculation for a base rate cut. The most recent GDP figures only add fuel to the fire. In December 2023 the average two-year fixed rate was 6.04% and the ‘typical’ borrower could expect a monthly repayment of around £1,600. Remortgage customers could now see their repayments drop by almost £180, which will ease a significant burden. However, for first-time buyers higher borrowing costs continue to limit their purchasing power.”
Simon Webb, managing director of capital markets and finance at LiveMore, commented:
“Older homeowners were one of the biggest losers in the recent Budget, and this fall in inflation could provide them with some welcome good news. It increases the likelihood of a cut to the Bank of England base rate tomorrow, which could in turn increase affordability particularly for those on variable-rate or tracker products. It’s also good news for those on fixed incomes or dealing with higher mortgage costs, as the market has in recent weeks started to price in potential rate cuts.
“Stability is key in the mortgage market, and a lower-inflation environment can open up more possibilities for later-life lending. At LiveMore, we’re committed to helping people aged 50 to 90+ find solutions that suit their circumstances – and our Mortgage Matcher® tool is helping advisers do just that in today’s changing market.”
Nick Hale, CEO of Movera, said:
“Falling inflation confirms the Monetary Policy Committee must cut the base rate tomorrow.
“The Budget announcement last month did very little to encourage home buying and selling. The Chancellor successfully made buy-to-let and higher value properties less attractive while offering nothing to first time buyers looking to get a foothold on the property ladder. And yet, home moves help to fuel the economy. Encouraging property transactions is a sure-fire way to stimulate growth.
“Given the Chancellor missed a trick with the budget, the sector really needs to see the base rate cut. If lenders can slash interest rates further, we might just be able to stimulate some momentum in the market, without having to rely solely on the 1.8 million due to refinance next year. UK Finance may have predicted earlier this week that it will be down to the remortgage wave to carry the property market through 2026, but that doesn’t have to be the case.
“At Movera we’re also driving innovation in the property transaction process. If the sector can do what it can to make the home moving process as slick as possible, that would remove yet another barrier contributing to ongoing hesitation and trepidation from buyers.”
Isaac Stell, Investment Manager at Wealth Club said:
UK inflation undershot expectations in November, bolstering the case for interest rate cuts in the face of challenging economic conditions.
Not only did the headline rates fall far more than anticipated, but services inflation, a key concern for the Bank of England also declined to 4.4%.
Despite inflation falling, there is still some way to go before the headline rates fall back to the 2% target. However, today’s news is a bright spot for the Bank of England, Government and consumers alike. With challenging economic conditions in the form of declining GDP and an un-employment rate nearing a five- year high, it is hoped a perfectly wrapped rate cut tomorrow will deliver some festive cheer to the UK economy.”
George Lagarias, Chief Economist at Forvis Mazars:
Today’s inflation number was a very welcome surprise. It probably all but solidifies tomorrow’s rate cut from the Bank of England, and it could add one more cut in the discussion before next June. We have maintained for some time that slowing growth is not a fertile ground for inflation, and the numbers begin to move the way we were expecting. Having said that, we are mindful of the fact that services inflation remains high, even as activity is slowing and unemployment rising.
By Andrew Phillips, Managing Director of V12 Retail Finance Limited:
“The likelihood of a Christmas rate cut by the Bank of England has increased following a sharper-than-expected fall in UK inflation to 3.2% in November, well below the anticipated 3.5%. Core inflation, which excludes volatile components such as energy, food, alcohol, and tobacco, also cooled to 3.2%. Coupled with Tuesday’s data showing unemployment rising to 5.1%, the central bank may feel encouraged to make a modest reduction.
Matt Harrison, Customer Success Director at Finova Broker said:
“Next year is set to be a big year for refinancing, with 1.8 million mortgages due to mature according to UK Finance. Many of these borrowers have been happily sat on a pandemic deal of less than 3% for the last five years but are now looking down the barrel of a significant increase in monthly repayments as rates stand.
“A cut to the base rate tomorrow, followed by another in the new year, could make a big difference to available interest rates and ease affordability pressures for borrowers. With inflation falling, the Monetary Policy Committee have no reason not to give borrowers what they need.”
Emma Wall, Chief Investment Strategist, Hargreaves Lansdown:
“It’s the print that the Monetary Policy Committee doves have been waiting for – inflation in the UK has come in at 3.2% for November, down from 3.6% the previous month and – crucially – under the 3.4% predicted by the Bank of England. As our Head of Personal Finance Sarah Coles has explained this morning, it’s food prices that helped fuel the fall. After rising the previous month, food inflation fell to 4.2%. She adds: ‘Energy prices also continued to spark lower inflation, as a lower energy price cap rise in October than the year before mean electricity prices are up just 2.8% and gas prices 2.1%. The Budget brought some good news for energy bills, with the removal of charges that are expected to cut the cost by £150 a year from April. Given that otherwise the forecast was for a rise in the price cap in April, this will be a relief for hard-pressed bill payers.’
It means that a rate cut tomorrow is all but guaranteed, though markets should not expect the voting to be unanimous. Today’s inflationdata follows Office of National Statistics data that showed wage growth also slowed in the three months to October. A cut to Bank of England base rate of 25 bps to 3.75% is most likely, but there is potential for one or two members to vote to hold given inflation is still above 2% target. This should help indicate where interest rates go in 2026. Our house view is investors and savers should expect two more cuts of 25bps a piece through the year.
The FTSE 100 has reacted well to the news inflation is falling, with broad gains across the piece. Lower interest rates are good news for any corporate with leverage, and has the potential to boost domestic consumption too, which in turn could support corporate revenues. Gilts are also reacting in anticipate of a BoE decision, with yield falling across the curve, most acutely at the short end.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said:
“Another significant fall in inflation is hugely welcome and should hopefully reinforce the growing consensus around a potential cut when the MPC meets tomorrow. Inflation is undoubtedly a key metric in the central bank’s decision-making and has long been a thorn in its side. Today’s data hopefully strengthens the view that there is growing momentum behind the easing of inflation, which is positive news for the bank rate, swap rates and lender confidence – ultimately helping to influence the pricing and availability of mortgage products.
“With inflation falling and potentially more good news on the base rate tomorrow, brokers should be ready to engage with clients and share these really positive headlines. As potential buyers and movers continue to return back to the market after the Budget and ready for the New Year, this should absolutely be fuelling conversations and helping to foster some confidence that plans are firmly back on track. As always, it is our role to help clients turn these headlines into practical action, helping them make informed decisions in a market that is becoming more and more favourable.”
Jonathan Handford, Managing Director at Fine & Country, comments:
“A month-on-month dip in house prices is not unexpected at this time of year, and today’s figures represent a gentle adjustment rather than any indication of a long-term downward trend.
“Our agents are consistently seeing that homes priced in line with local expectations and presented well are still attracting motivated buyers. With greater stock available in many regions, buyers are naturally more selective, but where the price and presentation are right, demand remains healthy.
“One factor that undoubtedly weighed on activity in October is the uncertainty surrounding the Autumn Budget. Speculation about potential property tax changes, including the new high-value property levy, created a degree of hesitation among some buyers and sellers. When households are unsure how future tax rules may affect them, they are more likely to pause and wait for clarity before making major decisions.
“Beyond these pre-Budget jitters, the softer monthly performance also reflects wider economic conditions. Higher borrowing costs earlier in the year have shaped buyer behaviour, and many households are taking more time to assess their long-term affordability.
“However, mortgage rates have begun to ease compared with their peak, and we are already seeing that reflected in growing enquiries and increased footfall. With inflation falling today too, the likelihood of an interest rate cut has strengthened, which should give the market a welcome boost.
“Looking ahead, greater policy clarity should help restore confidence. If borrowing costs continue to ease and inflationkeeps creeping down, we expect the new year to bring sustainable, positive growth.”
David Morrison, Senior Market Analyst at FCA-regulated fintech and financial services provider, Trade Nation, comments:
“Today’s inflation update was an early Christmas present for the Bank of England. This bigger-than-expected drop in both Core and Headline CPI makes it odds-on that the Bank will cut rates by 25 basis points after tomorrow’s monetary policy meeting. But inflation is still far above the Bank’s 2% target, and there’s no guarantee that the downward trend that has started to emerge over the last few months is set to continue. So, the path of monetary policy over the next year remains far from clear.”
Derrick Dunne, CEO of YOU Asset Management, has commented on this morning’s inflation data from the ONS:
“With recent data showing contracting economic growth, cooling average earnings and unemployment at its highest since early 2021, the scene would appear perfectly set for the Bank of England to cut rates tomorrow.
“Inflation dropping to 3.2% provides reassurance that this could come to fruition. While CPI remains above the Bank’s 2% target, signs that price pressures are easing make inflation less of a threat to the economy.
“The greater danger now is that monetary policy remains too restrictive for too long as economic momentum continues to fade. With growth contracting, the balance of risk is shifting toward the need for support, rather than further restraint.
“It’s therefore all eyes on the Monetary Policy Committee as they judge whether today’s print is enough to justify action.
“Anyone uncertain about what this means for their personal finances should speak to a financial planner.”
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