This morning’s inflation figures are good news. The fall in the Consumer Prices Index (CPI) to 3.9 per cent, from 4.7 per cent, not only exceeded market expectations by a healthy margin, but in November prices actually fell by 0.2 per cent. Given that averages earnings are rising by 7.3 per cent it is hard to sustain the idea that we are still in a cost of living crisis – even though there will inevitably be some people who don’t feel they are getting better off. Prices are falling in almost every sector, with only the cost of communications rising slightly, from 8.0 per cent to 8.1 per cent.
The figures dramatically increase the likelihood that interest rates will be cut in 2024, and probably earlier rather than later. Markets have already moved ahead of Bank of England governor Andrew Bailey in predicting rate falls.
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