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News: Inflation on the retreat?

CPI annual inflation - the Government's target measure - fell to 2.1% in November (from 2.3% in October) - the largest downward effect coming from transport, where petrol and diesel prices fell for the second successive month. Indeed, the average price of ultra-low sulphur petrol softened by 3.6p per litre, compared with a rise of 1.1p a year ago.

There was also a large downward effect from air travel, with fares on international routes falling by more than a year ago, particularly to European destinations.

Meanwhile, a small contribution came from restaurants and hotels, with the cost of accommodation services falling this year, particularly for overnight stays in UK hotels, but rising a year ago.

Elsewhere, alcoholic beverages and tobacco had the opposite effect, with retailers continuing to pass on price increases which started in October. Upward pressure also came from food and non-alcoholic beverages, mainly due to meat prices rising by more than last year, particularly for beef products.

RPI inflation also fell in November, but by less than the CPI, mainly reflecting smaller downward pressure from air travel, and stronger upward pressure from furniture prices, which rose by more than a year ago. In both cases this was due to differences in the weights between the two indices.

Small downward influences came from housing components excluded from the CPI, especially mortgage interest payments and depreciation costs - the amount home owners need to spend to maintain their property.

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