Inflation tumbles as shops rush to cut prices

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The crisis on the High Street has sent inflation falling as retailers slash prices.

It fell from 0.7 per cent in October to 0.3 per cent in November, according to the Office for National Statistics.

Many stores in England were shuttered during the second Covid lockdown, others cut prices to tempt shoppers, and an avalanche of Black Friday deals flooded the internet. The price of clothing and footwear fell 2.7 per cent - the biggest decline in a decade.

© Provided by This Is MoneyHigh Street panic: Many stores in England were shuttered during the second Covid lockdown, others cut prices to tempt shoppers, as an avalanche of Black Friday deals flooded the internet

The last time inflation was lower was in August, when it hit a five-year low of 0.2 per cent as the Eat Out to Help Out scheme cut the price of meals. 

The crisis on the High Street has claimed a string of victims such as Topshop owner Arcadia and store chain Debenhams.

On a brighter note, the Purchasing Managers Index from IHS Markit and CIPS suggested the economy returned to modest growth in December.

The struggling services sector recorded a reading of 49.9, while manufacturing saw a three-year high of 57.3 amid Brexit stockpiling. 

This gave a combined reading of 50.7, up from 49 in November. Readings above 50 indicate growth.

Thomas Pugh, an economist at Capital Economics, said the figure 'is probably understating the rebound in GDP in December'.

But the inflation reading may worry the Bank of England, which is not expected to change interest rates at its monetary policy committee meeting today.