The rate of inflation has fallen to its lowest level since March last year – boosting consumer spending power for struggling retailers in the run-up to Christmas.
The Office for National Statistics (ONS) reported CPI inflation falling from 2.4% in October to 2.3% last month – driven by the biggest month-on-month fall in petrol prices for more than three years as oil costs tumbled.
Retailers will hope that a slower pace of price rises – coupled with figures last week showing a surge in wage growth to levels not seen for almost a decade – will help consumers feel more confident about spending in the run-up to Christmas amid warnings about dire trading in the run-up to Brexit.
The ONS figures, however, showed little evidence shops had begun discounting in November as evidence grows of a markdown frenzy to drive sales in more recent weeks.
One study this week pointed to “record levels” of discounting at the end of a dire year for the sector which saw woeful consumer confidence combine with higher costs to see Toys R Us, Maplin and House of Fraser collapse.
The retail tycoon who bought the department store chain out of administration, Sports Direct boss Mike Ashley, has described “the worst November in living memory” for high street retailers.
A profit warning from ASOS this week showed strong online performers were also at the mercy of the spending slowdown that has contributed to the need for a string of other major chains to seek rescue deals and close stores.
The ONS said rises in tobacco prices – reflecting Budget duty increases – were the main upward pressure on inflation last month – with train and ferry fares also contributing.
Supporting the downside was the autumn slump in oil prices – driven by renewed fears of a glut in world supplies.
A barrel of Brent crude is currently trading at its lowest level for over a year – at $ 56 – suggesting it will maintain its position as a main driver of easing inflation this month.
The ONS also noted roles from falling prices for media-playing equipment such as televisions and theatre tickets.
Mike Jakeman, senior PwC economist, noted: “Setting the aside the effects of volatile components such as fuel, it is clear that inflation is on a downward trend.
“Both headline and core inflation measures have steadily slowed during 2018, as the effect of a weaker pound has diminished and economic growth has remained tepid.
“Inflation returning towards the Bank of England’s 2% target is good news for workers, who are receiving the dual benefit of accelerating wages and slowing inflation, pushing up their income growth in real terms.”