UK Inflation Slows Sharply in November 2025 Amid Food Price Drops and Government Investment in Grangemouth
UK Consumer Price Index (CPI) inflation slowed to 3.2% in November 2025, the lowest annual rate since March 2025, according to Office for National Statistics (ONS) data. Core inflation also fell to 3.2%, down from 3.4% in October. The main factor driving this slowdown was a fall in food prices, notably influenced by a supermarket price war ahead of Christmas.
Prices for cakes, biscuits, and breakfast cereals dropped, alongside declines in dairy products, sugar, jam, and chocolate. Tobacco prices eased, with a 4.0% year-on-year rise in November compared to 5.9% in October, marking the lowest rise since December 2022. Women's clothing and footwear prices also fell, declining 0.6% year-on-year, the first reduction since March 2021.
Factory gate price growth slowed, mainly due to lower food inflation, although raw material costs for businesses continued to rise. The inflation drop followed a spike earlier in the year linked to higher employment costs passed onto consumers. Meanwhile, unemployment rose to 5.1% since the Labour government took office, indicating ongoing labor market weakness. The UK economy contracted for two consecutive months ahead of Chancellor Rachel Reeves's second budget.
Most financial market participants—more than 90%—expect the Bank of England to cut interest rates from 4% to 3.75%, the lowest level in almost three years.
In related economic news, the UK government committed £120 million to save the last ethylene plant at Grangemouth, safeguarding over 500 jobs. This investment underscores government efforts to preserve vital chemicals infrastructure in the UK. The plant, operated with involvement from Ineos, produces ethylene essential for manufacturing medical-grade plastics, water treatment, aerospace, and car-building industries.
