UK inflation falls by more than anticipated to 2-year low of 3.9% in November

Inflation in the U.K. as measured by the consumer prices index has eased back to its lowest level in more than two years

LONDON -- Inflation in the U.K. as measured by the consumer prices index eased back to its lowest level in more than two years, official figures showed Wednesday, in a development that is likely to bolster speculation that the Bank of England may start cutting interest rates sooner than expected.

The Office for National Statistics said inflation dropped to 3.9% in the year to November, its lowest level since September 2021, from 4.6% the previous month. That decline was bigger than anticipated in financial markets.

The agency said the biggest driver for the fall was a decrease in fuel prices after an increase at the same time last year. Food price inflation also contributed to the decline.

Last week, the Bank of England left its main interest rate at a 15-year high of 5.25%, where it has stood since August following the end of nearly two years of hikes. Bank Gov. Andrew Bailey said interest rate policy would likely have to remain “restrictive for an extended period of time."

The Bank of England has managed to get inflation down from a four-decade high of over 11% but still has a way to go to get to its target of 2%.