Inflation sinks to 1963 level

In November inflation fell to its lowest level since July 1963. The headline rate of inflation, which includes mortgage interest payments, fell to just 0.9% from 1.6% the previous month.

Ten of the 14 groups that make up the index rose by more than the 0.9% average. Food prices rose on average by 2.6% with fresh fruit prices rising by 11%, bacon by 9% and poultry by 8%.

However, there were some large falls. Within the housing group there was an 18% fall in mortgage interest payments, offset to some extent by a 6% rise in council tax and rates.

And a 2.8% overall cut in motoring expenditure included a 13% cut in petrol and oil prices.

On the government's preferred measure for inflation, the underlying rate, which excludes mortgage interest payments, the increase was down to 1.8% from 2.3% the previous month.

Following such a significant drop in the inflation rates, TUC general secretary John Monks said: "Today's inflation figures show that the Bank's recent rate cuts have done nothing to stoke up inflation. They leave room for the Bank to continue cutting and to bring some seasonal cheer to Britain's hard-pressed manufacturers."