Current Inflation Rate – November 08

The annual rate of inflation (CPI) fell during November 2008 to reach 4.1%, some 0.4% lower than the previous month.  Although many, including the governor of the Bank of England, expect to see inflation fall dramatically during 2009, the figure remains relatively high, putting pressure on consumers.

Sharp declines in the cost of fuel were again responsible for the biggest downward pressure on inflation.  The price of fuel fell by over 9 pence per litre from October to November.

The decline in the cost of crude oil again played a part in reducing household costs as heating bills also fell compared to the previous year when prices were rising steeply.

The CPI was higher than anticipated, but according to David Kern, chief economist at the British Chambers of Commerce:

Normally, higher than expected inflation would be a concern, but given the risks of deflation next year, these figures should not deter the MPC from persevering with interest rate cuts.

[Picture credit: milena mihaylova licenced from Flickr]