Inflation on downward trend
The Consumer Prices Index (CPI) rate of inflation fell to 4.8 per cent in November it was revealed yesterday, representing the second consecutive 0.2 percentage point monthly decline.
Although the price of domestic heating and alcohol increased during the month, this was offset by a fall in the cost of food, petrol, clothing, furniture and household equipment.
A good harvest and competition between supermarkets helped to keep food prices down in November.
The Bank of England expects inflation to continue on a downward trend, reaching 1.5 per cent by the middle of next year.
It is then expected to remain below the Government’s 2 per cent inflation target until at least 2014.
Despite the fall, inflation is still outstripping wage rises and economic growth is expected to remain subdued, with the cost of goods and services rising twice as fast as household incomes.
According to figures released today by the Office for National Statistics (ONS) average earnings, excluding bonuses, were up 1.8 per cent annually in November.
Taking into account inflation, rising costs, ongoing cuts in public sector spending and a downturn in exports, analysts still expect the UK will fall back into recession next year.
There was also bad news on jobs today, with the number of people unemployed reaching 2.64 million in the three months to October, the highest level for 17 years.
Young people are fairing particularly badly in the jobs market, with 1.027 million people between the ages of 16 and 24 out of work.
This is the highest level of youth unemployment since records began in 1992.
However the overall unemployment rate remained steady at 8.3 per cent according to Office for National Statistics (ONS) figures.
With businesses worried over the ongoing eurozone debt crisis, a further rise in unemployment is expected over the winter.
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