UK inflation fell to 3.2% in November, driven by cheaper food, tobacco and clothing discounts. Markets now expect a BoE rate cut on 18 December.
Britain’s inflation rate cooled more sharply than expected in November, strengthening the case for an interest-rate cut just days before the Bank of England’s final policy decision of the year. Official figures show easing price pressures across groceries, clothing and tobacco—welcome news for households still feeling the cost-of-living squeeze, and a key input for policymakers weighing how quickly to bring borrowing costs down. [1]
The headline: inflation cools faster than forecast
The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rose by 3.2% in the 12 months to November 2025, down from 3.6% in October. On a month‑to‑month basis, CPI fell by 0.2% in November (compared with a 0.1% rise in November 2024), signalling that discounting and easing grocery inflation had a meaningful impact on the latest reading. [2]
For a broader measure that includes owner-occupiers’ housing costs, CPIH rose by 3.5% year‑on‑year, down from 3.8% in October, and fell by 0.1% on the month. [3]
At-a-glance: the key numbers the Bank of England watches
- Headline CPI inflation: 3.2% (Oct: 3.6%) [4]
- CPI monthly change: -0.2% (Nov 2024: +0.1%) [5]
- Core CPI (ex energy, food, alcohol & tobacco): 3.2% (Oct: 3.4%) [6]
- Services inflation (CPI): 4.4% (Oct: 4.5%) [7]
- Goods inflation (CPI): 2.1% (Oct: 2.6%) [8]
Those “core” and “services” measures matter because they can be better indicators of domestic price pressure—especially for a central bank trying to judge whether inflation is cooling sustainably or only because of short‑term discounting.
What drove inflation down: food, tobacco and Black Friday discounting
The ONS flagged two broad themes behind the slowdown: a marked easing in food inflation and a bigger‑than‑last‑year effect from seasonal discounting.
Food inflation eased — with bread and cereals doing much of the work
Food and non-alcoholic beverages prices rose 4.2% year‑on‑year, down from 4.9% in October, and fell 0.2% on the month. [9]
The ONS said the largest downward effect came from bread and cereals, where items such as cakes, biscuits and breakfast cereals fell in price this year but rose a year earlier—exactly the kind of “year‑ago comparison” that can move the headline figure quickly. [10]
Sky News also pointed to intensified competition among supermarkets heading into Christmas, describing a “price war” dynamic that helped push food costs lower. [11]
Tobacco and alcohol: a big “comparison effect” from last year’s duty rise
Prices in the alcohol and tobacco category rose 4.0% year‑on‑year, down from 5.9% in October, and fell 0.4% on the month. [12]
A key contributor was tobacco, where the ONS noted prices fell 0.1% between October and November 2025 versus a 3.3% rise a year earlier—likely reflecting last year’s duty increase timing and the fact that a 2025 duty change came after the ONS collection window. [13]
Clothing prices fell — and Black Friday was bigger this year
Clothing and footwear prices fell 0.6% year‑on‑year in November (after rising 0.3% in October), with the ONS explicitly linking part of the move to discounting: the share of discounted prices rose in both years, but increased more in 2025, “possibly linked to the influence of Black Friday.” [14]
The ONS said the largest downward effect in clothing came from women’s clothing. [15]
Why this matters now: the Bank of England decides rates tomorrow
The inflation report lands one day before the Bank of England’s next Bank Rate announcement, due Thursday 18 December 2025, with the current Bank Rate at 4%. [16]
Financial markets and many economists have been leaning toward a quarter‑point cut, and Wednesday’s inflation surprise strengthened that view. Reuters reported markets were close to fully pricing in a cut after the data, with investors also looking for additional easing in 2026 if disinflation continues. [17]
In recent months, the Monetary Policy Committee has already been split. In the Bank’s November 2025 meeting, the MPC voted 5–4 to hold Bank Rate at 4%, with four members favouring an immediate cut to 3.75%. [18]
The Bank has also signalled the direction of travel if inflation keeps cooling: it has said that if progress on disinflation continues, Bank Rate is likely to continue on a “gradual downward path.” [19]
Still, policymakers will be watching for signs that the drop is not just seasonal discounting. Reuters noted Bank of England officials have been cautious about interpreting sharp monthly moves—especially if the drivers are temporary or concentrated in volatile categories. [20]
The backdrop: weaker growth and a softer jobs market
Inflation isn’t the only number shaping the debate. The UK economy has shown signs of losing momentum, and the labour market has cooled.
- The ONS’s latest labour-market bulletin showed the unemployment rate rose to 5.1% (Aug–Oct period), while the employment rate eased. [21]
- The ONS also reported monthly GDP fell 0.1% in October, after a 0.1% fall in September (and no growth in August). [22]
That combination—easing inflation and weaker activity—typically increases the pressure on central banks to lower rates, provided they remain confident inflation is heading back toward target.
What households might feel next: mortgages, savings and everyday bills
A rate cut is not guaranteed, and the Bank of England will stress it is “data dependent.” But if Bank Rate does start to fall:
- Variable-rate borrowers (including some trackers) may see repayments drop relatively quickly after lender pass‑through.
- Fixed-rate mortgage pricing often moves ahead of decisions, driven by market expectations—so some of the impact may already be in today’s mortgage deals.
- Savers can face lower easy‑access and fixed savings rates as banks adjust deposit pricing in anticipation of a lower-rate environment.
On the cost-of-living side, the government has also been highlighting upcoming policy measures designed to reduce household costs. The Budget 2025 document says it aims to take around £150 off household energy bills on average from April 2026, alongside a one-year freeze on regulated rail fares and prescription charges. [23]
What to watch next
Three things are likely to drive the next wave of headlines:
- The Bank of England decision (18 December 2025) — not just the rate move, but the vote split and guidance about 2026. [24]
- Whether services inflation continues to cool — November’s 4.4% is encouraging, but the BoE will want to see a trend. [25]
- How much of the November drop proves temporary — discounting and one‑off effects can fade quickly, which is why policymakers will likely keep emphasising caution even if they cut. [26]
FAQ (for Google Search & Discover)
What is the UK inflation rate today (17 December 2025)?
The ONS reported CPI inflation at 3.2% in November 2025, down from 3.6% in October. [27]
When is the next Bank of England interest rate decision?
The Bank of England’s next MPC announcement is scheduled for 18 December 2025, with Bank Rate currently 4%. [28]
Why did inflation fall in November 2025?
The ONS highlighted lower contributions from food (notably bread and cereals), alcohol and tobacco, and clothing discounts, with Black Friday effects larger than last year. [29]
References
1. www.ons.gov.uk, 2. www.ons.gov.uk, 3. www.ons.gov.uk, 4. www.ons.gov.uk, 5. www.ons.gov.uk, 6. www.ons.gov.uk, 7. www.ons.gov.uk, 8. www.ons.gov.uk, 9. www.ons.gov.uk, 10. www.ons.gov.uk, 11. news.sky.com, 12. www.ons.gov.uk, 13. www.ons.gov.uk, 14. www.ons.gov.uk, 15. www.ons.gov.uk, 16. www.bankofengland.co.uk, 17. www.reuters.com, 18. www.bankofengland.co.uk, 19. www.bankofengland.co.uk, 20. www.reuters.com, 21. www.ons.gov.uk, 22. www.ons.gov.uk, 23. www.gov.uk, 24. www.bankofengland.co.uk, 25. www.ons.gov.uk, 26. www.ons.gov.uk, 27. www.ons.gov.uk, 28. www.bankofengland.co.uk, 29. www.ons.gov.uk
