A Cabinet minister told millions of people in Britain that “better times” lie ahead next year after inflation fell to 3.9 per cent.
Work and Pensions Secretary Mel Stride claimed that the “economy is turning the corner” after the rise in prices eased back more than expected by the City.
The Cabinet minister stressed that if inflation comes down “faster than expected” the Bank of England’s Monetary Policy Committee will be in a position sooner to cut interest rates which will feed through into lower mortgage bills for many homeowners.
The Tories are hoping that the economy picks up next year, being currently stalled, in time for an autumn General Election, or possibly even in May if the cost-of-living crisis lifts more quickly than expected.
Mr Stride told Times Radio: “This important information that we’ve got this morning is very significant. It’s a very significant drop in the level of inflation today.”
“We have successfully now over halved inflation. That will take a lot of the pressures...We’re really in a position now where I think we’re turning the corner on the economy. We’re going to have better times, I think, ahead next year.”
Later, he told LBC Radio: “A greater decrease in inflation of course means that monetary policy might be loosened a little bit more quickly than it would otherwise be - in other words, interest rates coming down.
“Those are matters for the independent Bank of England, they are not for me to predict, but if inflation comes down faster than expected, then that does take some pressure off the Bank of England in terms of keeping interest rates higher, which of course in time and in turn feeds into mortgage rates.”
The Office for National Statistics said the rate of Consumer Prices Index inflation fell to 3.9 per cent in November, down from 4.6 per cent in October, and the lowest level since September 2021.
Most economists had been expecting inflation to fall to 4.3% last month, from a peak of 11.1 per cent in October last year.
Grant Fitzner, chief economist at the ONS, said: “Inflation eased again to its lowest annual rate for over two years, but prices remain substantially above what they were before the invasion of Ukraine.
“The biggest driver for this month’s fall was a decrease in fuel prices after an increase at the same time last year.
“Food prices also pulled down inflation, as they rose much more slowly than this time last year.
“There was also a price drop for a range of household goods and the cost of second-hand cars.”
The further steep fall in inflation comes after the dramatic decline seen in October, when inflation dropped from 6.7 per cent in September, enabling Prime Minister Rishi Sunak to declare an early victory in his goal to halve inflation by the year end.
But the Bank of England has been quick to warn that the job of bringing inflation back to its two per cent target is far from done and has poured cold water on mounting hopes of an imminent interest rate cut.
The ONS confirmed that the Bank, which held interest rates at 5.25 per cent last week, had not seen the most recent inflation figures before its latest decision.
Shadow chancellor Rachel Reeves said: “The fall in inflation will come as a relief to families. However, after 13 years of economic failure under the Conservatives, working people are still worse off.
“Prices are still going up in the shops, household bills are rising, and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy.”
