UK Inflation Softens to Eight-month Low on Cooling Food, Alcohol Prices

04:46 AM EST, 12/17/2025 (MT Newswires) -- Annual inflation in Britain dropped in November for the second straight month, reaching its lowest level since March and reinforcing expectations of an easing in monetary policy. Growth in the consumer price index eased to 3.2% in the 12 months to November from 3.6% in October, data from the Office for National Statistics showed on Wednesday. Analysts had expected a smaller decline to 3.5%. On a monthly basis, consumer prices were 0.2% lower, compared with the 0.4% gain earlier and the market forecast of zero growth. Excluding energy, food, alcohol and tobacco, annual core inflation slowed to 3.2% from 3.4%, in line with forecasts. Month over month, core consumer prices edged down 0.2%, against the previous 0.3% rise. The annual goods price inflation slowed to 2.1% from 2.6%, while the services inflation, a closely watched indicator for the UK's service-based economy, lowered marginally to 4.4% from 4.5%. ONS mainly attributed the cooling inflation to food and non-alcoholic beverages, and alcohol and tobacco. Annual food and non-alcoholic beverages prices climbed 4.2% in November, down from 4.9% in October. Meanwhile, alcohol and tobacco inflation eased to 4% from 5.9%. Overall, downward contributions to the annual inflation rate came from eight divisions, while the communication sector made a small upside impact. The British central bank, which targets 2% inflation over the medium term, will announce its monetary policy decision on Thursday, when the key interest rate is widely expected to be cut by 25 basis points to 3.75%. "The UK's [Bank of England] is likely to reduce the Bank Rate, as a majority of [monetary policy committee] members will foresee a wider output gap and diminished inflation otherwise emitting from tighter fiscal policy in 2026," according to Macquarie strategists. "In the medium term, the UK's political outlook will come into focus too, with potentially adverse consequences."