Is UK inflation peaking?

This is due primarily to falling motor fuel prices - could we have moved past the peak for overall inflation in the UK?

The latest UK inflation data is available from ONS, up to November 2022.

“All items” inflation is now +10.7% year-on-year, by the CPI method, this is down 0.4% when compared with the October figure.

Using the slightly wider RPI method, “all items” inflation stands at +14.0%, a fall of 0.2% compared with the October figure.

The largest downward inflationary contributors in November were fuel prices and the price of second-hand cars, but rising hospitality prices partially offset some easing across other categories.

Lower inflation does not mean that prices are falling, but that they are not rising as fast as they were.  The falling inflation rates do suggest that the UK may have reached the peak of general inflation and price rises will begin to slow from here.

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Source: ONS, December 2022

Food and drink CPI inflation moved upwards to +16.5% in November, but the rise slowed to only 0.1% in the month. This is in-line with our latest food price inflation forecast, issued included in our latest Viewpoint report: How bad is the Economic Storm?

The slowing inflation rate is possibly due to retailers investing in prices ahead of the key Christmas period - further price rises may occur in 2023.

The gap between earnings and living costs is still widening and IGD’s shopper research shows that financial confidence is falling across all ages, geographies and socio-economic groups.

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