UK inflation rate falls to 2.1%

The UK's inflation rate, as measured by the consumer prices index, fell to a four-year low of 2.1% in November, down from 2.2% the month before.

The Office for National Statistics said the change was caused by slower increases in food and energy prices.

The ONS said this was because the impact of recently announced rises in energy prices were yet to take effect.

Inflation as measured by the retail prices index (RPI) remained unchanged at 2.6%. 

The fall in inflation will be welcome news to households that have seen a squeeze on their spending power because of high inflation.

Cost of living increases are still running ahead of average pay rises - but with the inflation rate now at the lowest since November 2009, the gap has narrowed. 

One factor was food prices, which were little changed in November, whereas there was an increase in the same month a year earlier. 

What analysts call core inflation, excluding volatile items such as food and energy, is running below 2%.

But the latest figures do not take in the latest increases in utility bills - they will have an impact on the next set of inflation numbers. 

"This good news may not last too long, however, given the increases in utility costs that are to hit the basket next month, courtesy of recent price rises by energy providers," said Jeremy Cook, chief economist at foreign exchange company, World First.

Howard Archer, chief UK and European economist at IHS Global Insight, added: "It is possible that inflation could move up in December as energy and gas price hikes increasingly kick in."

The fall will relieve pressure on Bank of England governor Mark Carney to increase interest rates, even though property prices rose 5.5% in the 12 months to October, according to the ONS, the fastest increase since September 2010.

Mr Carney has indicated that the Bank will not necessarily raise interest rates straight away even after the unemployment rate, currently at 7.6%, falls below 7%.

Unemployment data released on Wednesday is expected to show that the rate remained at 7.6% for the three months to October.

The Bank aims to keep annual inflation close to a government-set target of 2%, but the rate has been above this level since November 2009. 

Two years ago, the rate was above 5%. 

The ONS said the prices of both food and non-alcoholic beverages were little changed between October and November, compared with a rise of 1.1% between the same two months a year ago. 

The main downward contributions came from fruit, where prices rose by less than a year ago.

The prices in restaurants and hotels also rose by less between October and November than between the same two months in 2012. 

Transport prices also fell by 0.5%. However, this was less than the 1% fall for the same period last year. 

Meanwhile, separate data released by the ONS showed that in the year to November, factory gate prices for UK manufacturers rose by 0.8%, the same as in the year to October. 

However, the rate of increase was slower than the 0.9% rise that analysts had expected. BBC