November saw a drop in shop price inflation – falling to 2.7 per cent from 3.0 per cent in October – according to the British Retail Consortium.
The news means that inflation has fallen for the third month in a row, following its peak in August. The BRC expects inflation to fall again in December, but added that the VAT cut alone won’t increase consumer spending and that the Bank of England needs to cut rates to help UK retailers:
"High-profile discounting and falling prices for key commodities have brought overall shop price inflation down even more from its peak in August,” said the BRC’s director general Stephen Robertson.
"The VAT cut will contribute to reducing inflation further in December but can't make a big difference to consumer spending on its own.
"The Bank of England should have the courage to cut rates by another whole point."