The Consumer Prices Index rate of inflation dropped down to 2.3 per cent over November, down from 2.4 per cent in October 2018, the Office for National Statistics has revealed.

The ONS also revealed that the Consumer Prices Index including occupiers’ housing costs (CPIH) remained at 2.2 per cent in November, unchanged from October 2018. The ONS said largest downward contributions to change in the 12-month rate came from falls in petrol prices and across a variety of recreational and cultural goods and services, principally games, toys and hobbies, and cultural services.

These downward effects were offset by increased tobacco prices and, to a lesser extent, price rises in a variety of other categories, for example, accommodation services and passenger sea transport.

Aegon head of pensions, Kate Smith, said: “After remaining unchanged for the previous two months, the drop in the inflation rate to 2.3 per cent, the lowest for the year, means we are edging closer to the Bank of England’s target of 2 per cent. With inflation falling and the annual nominal wage growth rising to 3.3 per cent for the three months to October, households will begin to feel an ease in the cost of living, a welcomed festive bonus at this time of year where disposable incomes are at their most stretched.

“While it’s always tempting to spend the ‘extra’ income at the end of the month, if earnings continue to outpace inflation at the current rate, individuals should look to save any increase on a regular basis as it could make a big difference to their long terms savings.”

Furthermore, XPS Pensions Group CIO, Simeon Willis, noted that inflation has been “bumpy” over the last 12 months.

“We started the year with Mark Carney having to explain to the Chancellor why the CPI rate was 1 per cent over target - with sterling depreciation being the main reason. CPI has subsequently fallen although not making it as low as the 2 per cent target. The figure for November shows signs of stabilising, but the path of inflation over the next few months will be heavily influenced by the path of Brexit. However, of greater importance to pension schemes is long-term inflation expectations which have risen only marginally over the year, despite all the uncertainty of Brexit.”

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