The latest official figures show the UK's inflation rate has fallen again, dropping to 3.2% in November 2025. This represents a decrease from the 3.6% recorded in October and marks the lowest annual rate in eight months, since March of this year.
What the latest inflation data means
The data, released by the Office for National Statistics (ONS), indicates that the pace of price rises across the economy is continuing to slow. However, the rate remains significantly above the Bank of England's official 2% target. It is crucial to understand that a lower inflation figure does not mean prices are falling; it signifies they are increasing at a slower pace than before.
The ONS calculates the headline inflation figure by tracking the cost of a representative 'basket' of goods and services that households typically buy. This provides an average, meaning the price changes for individual items, such as specific food staples or energy bills, can be higher or lower than the main 3.2% figure.
Timing ahead of the Bank of England's crucial meeting
This fresh inflation snapshot arrives at a critical moment, coming just one day before the Bank of England's Monetary Policy Committee announces its final interest rate decision of the year on Thursday. The central bank has been battling to curb inflation for over two years by raising its base rate.
The theory is that higher interest rates make borrowing more expensive, which reduces consumer spending, dampens demand, and ultimately helps to lower price inflation. This policy, however, has directly increased mortgage costs for millions of homeowners, placing considerable strain on household finances.
The path of inflation and interest rates
Inflation began its sharp ascent in 2021, driven initially by post-pandemic energy demand and then severely exacerbated by the Russian invasion of Ukraine, which sent energy and global food prices soaring. It peaked at a 40-year high of 11.1% in October 2022.
In response, the Bank of England raised its base rate from a historic low of 0.1% in December 2021 to a peak of 5.25% in August 2023. After a sustained period of restrictive policy, inflation finally fell to a three-year low of 1.7% in September 2024, briefly dipping below the 2% target, before creeping up again in October. The base rate has since been cut five times to its current level of 4%.
All eyes will now be on Threadneedle Street to see how this latest inflation data influences their decision on whether to hold or further cut interest rates, balancing the fight against persistent price pressures with the need to support a fragile economy.
