UK inflation slows sharply in November
By Michele Maatouk
Date: Wednesday 16 Dec 2020
(Sharecast News) - UK inflation slowed sharply in November as the price of clothing, food and non-alcoholic drinks declined, with Black Friday playing its part, according to figures released on Wednesday by the Office for National Statistics.
Consumer price inflation fell to 0.3% from 0.7% in October, coming in below consensus expectations of 0.6%.
ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "With significant restrictions in place across the UK, inflation slowed, predominantly due to clothing and food prices. Also, after several months of buoyant growth, second-hand car prices fell back a little."
The biggest downward contribution came from clothing and footwear, which saw prices fall 2.6% between October and November, compared to a 1% increase in the same period a year ago.
The ONS noted that prices usually rise between these two months but said price movements across 2020 have been unusual compared with previous years and appear to have been affected by the coronavirus lockdowns.
This year, the decline in clothing and footwear reflects increased discounting and Black Friday discounts lasting longer than usual.
Laith Khalaf, financial analyst at AJ Bell, said: "Of course, Black Friday occurs every year, but this time around discounts were particularly steep in clothing sales, which led to an unseasonal fall in prices. That highlights the continued pressure on the retail sector, and while price cuts on the shelves are good for consumers, they don't bode well for profits.
"We shouldn't set too much store by one month's inflation figure, particularly this time around when a second national lockdown meant the statisticians weren't able to collect all of the usual data.
"However, the broader picture remains one of low inflation and that spells low interest rates for the foreseeable. We can expect inflation to tick up next spring, when the basis for comparison moves into the post-pandemic era and the big drop in fuel prices falls out of the equation in March, but that won't be enough to persuade the Bank of England to tighten monetary policy."
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