British inflation has unexpectedly tumbled to its lowest rate in over a generation in November due to sharp falls in petrol prices, according to Britain’s Office for National Statistics.
Underlying inflation, which excludes volatile home loan payments, crashed to just 1.8 per cent last month from 2.3 per cent in October and way below City forecasts of 2.1 per cent.
The figure is the same as last January and the equal lowest since records began in 1975. It is bound to trigger fresh speculation of further interest rate cuts from the Bank of England, which aims to keep the retail price index around a government-set target of 2.5 per cent.
The overall headline retail price index, widely used by wage bargainers, staged an even more spectacular fall, declining to just 0.9 per cent in November from 1.6 per cent in October. That is the lowest figure since July 1963.
Petrol prices fell around 5 per cent last month because of a steep dive in crude oil prices on international markets.
The Office for National Statistics said today there was also a large downward effects from falls in second-hand car prices, which fell more steeply than this time last year.
Another large downward effect came from housing costs, as the Bank of England's decision on October 4th to cut interest rates fed through to mortgage interest payments in November.
The Bank of England has cut interest rates seven times this year in a bid to ward off recessionary winds blowing through the world economy. Rates are at a 37-year low of 4 per cent.