Consumer Price Index (CPI) inflation fell to 3.2% in November, down from 3.6% in October. This downside surprise was driven largely by weaker prices in food and core goods, alongside drops in volatile categories such as air fares, clothing, and accommodation.

Matt Swannell, chief economic advisor to the EY ITEM Club, noted that while services inflation remains somewhat “sticky”, the overall trend is positive. “Inflation is expected to drift lower through 2026,” Mr Swannell said, citing lower wholesale costs and the removal of certain government levies on energy bills.

Although underlying services inflation edged slightly higher, the general cooldown in prices – specifically the softening of food inflation – is widely viewed as sufficient evidence for policymakers to ease the base rate.

Economic experts are united in their prediction of a 0.25 percentage point (25bps) cut to the Bank Rate this week.

Luke Bartholomew, deputy chief economist at Aberdeen, described the cut as “all but certain”, suggesting that the sharp drop in inflation fulfils the criteria set out in the MPC’s November minutes. With current inflation reading significantly below the Bank’s previous forecast, the argument for keeping policy on hold has weakened considerably.

Kevin Brown, savings expert at Scottish Friendly, agreed: “Taken together with slowing wage growth and a weakening economy, a rate cut this week now looks nailed on. And we expect at least one, but possibly two further rate reductions over the coming 12 months.”

He added: “For borrowers, this is the most encouraging backdrop they’ve seen in a while. Falling inflation and lower interest rate expectations should continue to feed through into more competitive mortgage pricing, which will benefit those coming to the end of fixed-rate deals.

“As for savers, it means the best rates won’t be around for long – so now could be the time to act. And for those looking to improve their chances of outpacing inflation, investing remains the more effective option to provide the potential for greater returns over the long term.”