November UK Inflation Slows Amid Second Lockdown

NOV CPI -0.1 % M/M, +0.3% Y/Y VS +0.7% Y/Y OCT

NOV CORE CPI -0.1 % M/M, +1.1% Y/Y VS +1.5% Y/Y OCT

NOV OUTPUT PPI +0.2% M/M; -0.8% Y/Y VS -1.4% Y/Y OCT

NOV INPUT PPI +0.2% M/M; -0.5% Y/Y VS -1.2% Y/Y OCT

Annual headline inflation ticked down to 0.3% in Nov, falling short of market expectations of a small downtick to 0.6%. This marks the 16th reading below the BOE 2% target. Core inflation eased to 1.1% in Nov, the lowest level since Aug and below market forecasts for a 1.4% gain. Nov's downtick was mainly driven by falling prices for clothing and footwear as well as food prices due to tighter restrictions across the UK. Clothing and footwear prices fell 3.6% on an annual basis, shaving off 0.24pp of price growth. The ONS said an increase of price discounting is observable in the dataset and Black Friday sales were more spread out than usual this year. They further noted that prices for clothing usually increase at this time of the year in contrast to Nov's m/m decline of 2.7%, signalling a distortion of seasonal patterns. Food prices showed the second largest negative contribution to price growth, subtracting 0.11pp from CPI. Output inflation fell by 0.8%, while input inflation declined by 0.5%, a 10th consecutive negative reading. Again, petroleum products and crude oil was the largest downward contribution to output and input inflation.