UK CPI inflation falls to 4.8%

UK CPI inflation fell from 5% to 4.8% in November, the Office for National Statistics has said, in line with economists’ forecasts.

RPI inflation fell from 5.4% to 5.2%, the ONS added, while core CPI dropped from 3.4% to 3.2%, a slightly larger fall than had been forecast.

The figures represent the second consecutive monthly fall in both CPI and RPI, which reached highs of 5.2% and 5.6% respectively in September.

The Bank of England's latest inflation report, published last month, said inflation would likely fall back "sharply" through 2012 as contributions from VAT, energy and import prices declined and slack in the labour market persisted.

The largest downward effects on the November CPI figure came from food and non-alcoholic beverages, according to the ONS.

Prices in the sector overall rose by 0.6% on the month, down from 1.6% last year, despite a record 1.6% monthly rise in the price of meat between October and November 2011.

"We had cautiously pencilled in a rebound in food price inflation after October's sharp fall but in fact it dropped further from 4.6% to 3.7% - suggesting supermarkets are still failing to pass on fully past rises in agricultural prices," said Capital Economics chief UK economist Vicky Redwood.

"Anecdotal evidence suggests that soft consumer demand is increasingly forcing retailers to discount prices. There is still a lingering risk that inflation picks up again in December, but come January - when the VAT rise drops out - it should start to fall like a stone."