Introduction to Inflation in Britain
Britain’s consumer price index (CPI) rose by 3.2 percent year-on-year in November 2025, which is slower than the 3.6 percent increase recorded in October. This change in inflation rate has sparked mixed reactions among analysts, with some welcoming the easing of stubbornly high inflation and others cautioning about concerns regarding economic recovery.
Causes of the Decline in Inflation
The decline in inflation is largely attributed to lower food prices, which traditionally rise during this time of year. According to the Office for National Statistics (ONS), prices for food and non-alcoholic beverages increased by 4.2 percent year-on-year last month, down from 4.9 percent in October. The extensive discounting by retailers during the Black Friday month also played a significant role in the easing of inflation. Kris Hamer, director of insight at the British Retail Consortium, noted that larger promotions ahead of Christmas helped bring down food inflation.
Impact on the Economy
The deceleration of inflation suggests more room for the Bank of England (BoE) to cut interest rates. Stuart Morrison, research manager at the British Chambers of Commerce, stated that if the Bank of England acts as expected, it would be a welcome early Christmas present for businesses still under serious cost pressure. However, analysts warned that the slowdown in CPI growth does not necessarily signal the all-clear for the economy.
Risks of Recession
Julian Jessop, economics fellow at the Institute of Economic Affairs, cautioned that the news that inflation is falling faster than expected may also signal rising recession risks. He noted that while inflation is easing, prices are still rising from already high levels, albeit at a slower pace. Britain has faced persistent high inflation in recent months, with the country’s CPI rising by 3.8 percent year-on-year in September, nearly double the BoE’s 2 percent target.
Challenges Facing Retailers
Retailers have been striving to offer great value in the run-up to Christmas, but government-imposed costs have made this increasingly difficult. Kris Hamer urged the creation of a policy environment that reduces the cost and regulatory burdens on the industry, allowing retailers to invest more in both their prices and customer experience. The aggressive price discounting in clothing, footwear, and household goods suggests that pre-Budget jitters turned Black Friday into Black November, which is not necessarily healthy or sustainable.
Conclusion
In conclusion, while the decline in inflation is a welcome sign, it also poses risks of recession and highlights the challenges facing retailers. The economy will continue to struggle unless business costs are reduced and firms are provided with the right tools to invest, recruit, and trade. The Bank of England’s decision to cut interest rates may provide some relief, but it is crucial for the government to create a policy environment that supports businesses and promotes economic growth.
