Jessica O'ConnorThe Trades Union Congress (TUC) has called on the Bank of England to begin a series of interest rate cuts in the coming months, following a larger than expected drop in inflation.
Latest figures show CPI inflation fell by 0.4% in November, from 3.6% in October to 3.2%.
Despite the easing, the TUC warned that high interest rates continue to place pressure on both households and businesses, limiting spending and investment.
Responding to the data, TUC General Secretary Paul Nowak said: “Inflation may be falling, but many working people are still struggling to afford the basics.
“The government acted to protect living standards and push back against inflation in last month’s Budget, but more must be done.
“The economy is fragile and high interest rates are draining confidence from households and firms. It’s vital that we now boost demand.
“The Bank of England has been too cautious this year, and inflation is already lower than they expected only last month. So an interest rate cut this week must be the start of a sequence of reductions over the months ahead. It’s long overdue and it’s the shot in the arm that the economy needs.
“Lower rates will give firms the confidence to invest and help get more households spending.”
The TUC said a sustained reduction in interest rates would support jobs and wages by encouraging business investment and easing financial pressure on working households.
