Admin

A big factor in the drop was a fall in petrol and diesel prices.

In a bid to curb inflation, the Bank of England increased interest rates to 5.25%, but has held rates at its last three meetings.

What does inflation mean?

Inflation is the increase in the price of something over time.

If a bottle of milk costs £1 but £1.05 12 months later, then annual milk inflation is 5%.

How is the UK's inflation rate measured?

The Office for National Statistics (ONS) tracks the prices of hundreds of everyday items in an imaginary 

The basket is regularly updated to reflect shopping trends, with the most recent changes 

, which took food inflation to a 45-year high.

Alcohol prices in restaurants and pubs also rose.

How does raising interest rates help to tackle inflation?

The Bank of England has a target to keep inflation at 2%, but the current rate remains almost double that.

The traditional response to rising inflation ]

This makes borrowing more expensive, and means some people with mortgages see their monthly payments go up. Some saving rates also increase.

When people have less money to spend, they buy fewer things, reducing the demand for goods and slowing price rises.

Businesses also borrow less, making them less likely to create jobs; some may cut staff.

In August, the Bank ] taking the main rate to 5.25%.

It held rates at that level at its three subsequent meetings in September, November and December.

] and suggested rates were likely to remain at 5.25% for an "extended period".

However, the larger than expected fall in the November inflation figure has ]

What happens when inflation falls?

Lower inflation doesn't mean prices drop - it means they rise less quickly.

The Bank of England had already predicted that inflation will drop to about 4.5% by the end of the year and fall further in 2024.

Bank governor Andrew Bailey said it was "crucial that we see the job through" and get price rises back to the 2% target, because people "should trust that their hard-earned money maintains its value".

In October, the International Monetary Fund (IMF) predicted the UK would have the highest inflation rates of any G7 economy in both 2023 and 2024. As a result, it thought UK interest rates would remain relatively high until 2028.

In January 2023, Prime Minister Rishi Sunak said halving inflation by the end of 2023 was one of the government's five key pledges. It said it had met its target in October.Are wages keeping up with inflation?

Official figures showed that - on average - regular pay excluding bonuses rose by 7.3% in the three months to October compared with the same period a year earlier.

That was a slight fall from the 7.7% increase seen in the previous quarter

Although earnings were not rising as quickly as they had been before, they were outpacing inflation, so wages were growing in real terms.

However, unions point out that many workers have received smaller pay increases, which led to widespread strikes over pay.

The government previously argued that big pay rises could push inflation higher because companies might increase prices as a result.What is happening to inflation and interest rates in Europe and the US?

Many other countries have also been experiencing a cost-of-living squeeze for similar reasons: increased energy costs, shortages of goods and materials, and the fallout from Covid.

The annual inflation rate for countries that use the euro was estimated to be 2.4% in the 12 months to November, down from 2.9% in October and 4.2% in September. That is the lowest level for more than two years.

As in the UK, the European Central Bank (ECB) has increased interest rates to try to bring rising prices under control.

On 14 September, it raised its key interest rate - the benchmark deposit rate - to 4%, a record high, but this is widely expected to be the last increase for a while.

In the US, inflation was 3.1% for the 12 months to November, down from 3.2% in the year to October,

At its December meeting, the US central bank kept its key interest rate unchanged between 5.25% and 5.5% for the third time. Rates remain at their highest level for more than two decades, but cuts are expected in 2024