UK inflation falls sharply in November to 12-year low

British inflation fell to its lowest level in more than 12 years in November, further easing the squeeze on consumers and leaving the Bank of England under no pressure to raise interest rates.

Reflecting a slide in global oil prices, the consumer price index rose by an annual 1% in November, compared with 1.3% in October, the Office for National Statistics said on Tuesday. The 1% rate was the lowest since September 2002.

Food prices, which have been pushed down by a supermarket price war, fell 1.7%, their biggest fall since June 2002, and a slowdown in the rising prices of computer games also helped bring down the headline inflation rate.

The Bank of England said last month it expects inflation to fall below 1% in the next few months, and since then oil prices have fallen further. BoE Governor, Mark Carney, would have to explain formally to finance minister George Osborne a move in the CPI of more than 1% away from the Bank’s 2% target. The fall in inflation has given some respite to British households and average earnings rose by more than prices in September, welcome news for the government ahead of the May’s 2015 elections.

The BoE has predicted CPI will hit its target of 2% only towards the end of 2017.