Inflation has fallen to its lowest level since March 2017 after falling oil prices brought down the cost of filling up at the forecourt.
The news will come as welcome relief to cash-squeezed households hit by rising prices.
According to the Office for National Statistics (ONS), the Consumer Price Index (CPI) measure of inflation was 2.3% in November 2018, down from 2.4% in October 2018. The ONS’s alternative measure called CPIH, which includes housing costs, remained unchanged at 2.2%.
The drop was driven by the fall in petrol prices after the cost of crude oil plummeted. Petrol prices fell by 2.6p a litre between October and November, compared with a rise of 1.8p a litre for the same period last year.
Recreational and cultural goods and services – primarily the drop in video game prices - also helped to bring inflation down.
However, these downward effects were offset by increased tobacco prices and price rises in accommodation services.
Mike Hardie, head of inflation at the ONS, says: “Inflation was little changed as falling petrol prices, thanks to a substantial drop in the cost of crude oil, were offset by rises in tobacco prices following the duty changes announced in the Budget."
The Bank of England raised interest rates in August for the second time in 10 years to 0.75% and has warned more rises might be necessary to bring inflation back under control.
Mike Jakeman, senior economist at PwC, says he expects inflation to slow to the Bank of England’s 2% target in the coming months.
He says: "Even setting the aside the effects of volatile components such as fuel, it is clear that inflation is on a downward trend. Both headline and core inflation measures have steadily slowed during 2018, as the effect of a weaker pound has diminished and economic growth has remained tepid.
"Inflation returning towards the Bank of England’s 2% target is good news for workers, who are receiving the dual benefit of accelerating wages and slowing inflation, pushing up their income growth in real terms.
"It also suggests that the Bank’s current monetary policy is suitable for now, with the central bank highly likely to leave interest rates unchanged until there is more clarity on the circumstances through which Brexit will be resolved.”
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Kate Smith, head of pensions at Aegon, says: "Households will begin to feel an ease in the cost of living, a welcomed festive bonus at this time of year where disposable incomes are at their most stretched.
“While it’s always tempting to spend the ‘extra’ income at the end of the month, if earnings continue to outpace inflation at the current rate, individuals should look to save any increase on a regular basis as it could make a big different to their longer terms savings.”
Despite inflation remaining above the government's 2% target, there are still some inflation-beating savings accounts to choose from.
Two years is the shortest term that offers an interest rate above the current rate of inflation, with Masthaven paying the top rate of 2.35%.
In total, there are now 51 fixed term accounts that match or beat the inflation rate of 2.30%.
If you want to beat the erosive effects of inflation you need to find an account paying a higher rate than inflation.
If you leave your funds in an easy access account paying 0.15%, a deposit of £50,000 would be worth just £44,962 in real terms over five years, at an inflation rate of 2.30%.
Tom Adams, head of research at savings advice site Savings Champion, says: “Despite inflation falling in November and the number of inflation-beating accounts leaping up, savers are still having to contend with inflation at a higher level than many of their savings accounts are paying, especially if they are unable to tie their money up.
“While you would have to tie your money up for at least two years to beat CPI inflation, those who need more access to their money still do not have to accept paltry rates - particularly from the big high street brands.
“If you can't tie up your funds, switching to mitigate the effect of inflation is far better than leaving the funds earning next to nothing and by choosing the best rates, they are at least reducing the effect of inflation on money that they need access to.”