"Today’s data should be enough to prompt a rate cut from the Bank of England this week, thanks to an easing in underlying inflation. The decision may still be close, with hawks pointing to the continued strength of underlying price pressures as a reason to remain cautious, while doves will highlight disinflationary pressures in the pipeline that are likely to bring inflation closer to target over the coming months.
“The measures announced in the Budget, including the energy bills package, are expected to result in household energy bills falling by around 5% from April 2026 onwards. The Chancellor also avoided announcing significant tax hikes on businesses, reducing the scope for adverse second-round inflationary effects.
“Headline inflation dropped to at 3.2% in November, led by weaker food and beverage prices. Inflation is expected to continue falling gradually, with both food and energy prices expected to ease further.”
