Inflation falls 0.2% in November

Inflation fell in November as the spectre of recession loomed large on the UK economy.

The consumer prices index (CPI) measure of inflation dropped back from 5% to 4.8% and the retail prices index (RPI) which includes the cost of mortgage interest repayments lowered to 5.2% from 5.4% in October, according to the latest official data released by the Office for National Statistics (ONS) on Tuesday.

The drop was expected as the influence of the high rises in utility costs subsided after the massive price hikes seen in September. Food prices have also retreated from their highs of earlier in the year, partly due to a supermarket price war in the run up to Christmas.

A statement from the ONS said: "The largest downward pressures came from food, petrol, clothing and furniture, household equipment & maintenance. Partially offsetting these were upward pressures from increases in the cost of domestic heating and off sales of alcohol."

It is expected that inflation will continue to fall in 2012 as the effect of the increase in VAT to 20 per cent drops off in January.

The Bank of England target for inflation is two per cent and the Bank has repeatedly said over the last six months or so that they expected inflation to rise to five per cent before dropping back sharply in 2012, possibly to below the two per cent target by the end of 2012.

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