Ramzan Karmali
BBC Business reporter

Kai Clarke is a room leader at Purple Jay Nurseries’ Lambeth branch. She has received pay rises totalling 16% this year but says it feels like most of the extra money she earns goes on bills.

"Now it's like we've broken even because the salary has gone up but so have the bills," she said.

"The essential bills sky rocketed - gas and electric mainly - then there's council tax to pay. I would say that I'm happy and I'm grateful but the excitement has worn off because I've noticed it is all going into the bills. Even simple things like juice, milk and butter have gone up."

The nursery’s deputy manager, Isaura Heredia Via, says: "Before the pay rises I was finding it hard to pay my rent and all of my bills. But now there's the increase on our salary it makes a great impact on our daily life so we would be able to pay everything on time and won't have to ask anyone to borrow money to try to pay bills or cover expenses."

She added: "It's still hard because the price of food and everything is increasing, obviously rent as well, but it certainly helps to make our lives a bit easier so we won't be as stressed and having to borrow."

A survey for BBC Newsround has found children as young as seven are worried about affording things they need, like food and energy.

The programme talked to more than 2,000 children between the ages of seven and 15. Nearly three-quarters had concerns about the cost of living.

They said they were missing out on things they used to enjoy - and feared for the future.Joseph, Mackenzie and Amiyah, all aged 11, tell Newsround presenter Hayley Hassall in 5 Minutes On about the challenges they face.

"It's hard, because you could have a whole cupboard of food and then the next week you could have nothing," says Mackenzie.

For Amiyah, who cares for her autistic brother, the hardest thing is not being able to afford the activities they used to do together. She walks to school now instead of getting the bus and sometimes wears her gloves and coat inside to keep warm.

Listen here.

A senior economist at the Resolution Foundation think tank, which aims to improve the standard of living of low and middle-income families, says while today's inflation figures are "good news for policymakers," "families are still getting poorer month-on-month".

In quotes posted on the Resolution Foundation's Twitter account, Jack Leslie says: "Britain may now be past its inflation peak, which is good news for policymakers at both the Bank and Treasury as they grapple with rising interest rates and public debt.

"But with price rises still massively outstripping pay rises - and Britain's poorest families facing an inflation rate of over 12% - families are still getting poorer month-on-month and the cost-of-living crisis will continue to deepen in 2023."

Chris Mason
Political editor

The rate of increase in prices might be falling, but prices are still going up and going up big time, particularly compared to wages and especially compared to average wage rises in the public sector.

So what happens next?

Will the government budge? When I repeatedly asked the prime minister this yesterday, he insisted he wouldn’t.

There are three things playing out on all this this winter, and each interact with the other.

The ongoing appetite of unions and strikers to continue striking.

The ongoing appetite of inflation to gnaw away at the value of money.

The ongoing appetite of folk to tolerate or sympathise with the disruption caused by strikes.

How will these appetites wax and wane in the coming months, and what is the impact of one on the other?

For now at least, there appears to be no desire in government to shift its view on pay.

They hope, they pray, that inflation will ease quickly enough to ease the pressure they’re under.

But falling inflation won’t suddenly leave people feeling flush. Just a little less poorer than otherwise.

Image source, Getty Images

We've also heard some reaction from the boss of the Money Advice Trust, the charity that runs the National Debtline.

Joanna Elson said: "Households are facing a tough winter ahead as inflation continues to remain high.

"It’s clear the challenge of affording essential costs, including food and energy bills, isn’t going away anytime soon and for many is only set to get harder with the cold weather now well and truly with us."

She added that government help with energy bills will provide some relief for lots of people, but argued that it doesn't come close to "matching the scale of the challenge" households are facing.

You can read more about what cost-of-living payments are available here, and what extra help there is if you're on a lower income.

The chair of the Treasury Committee in the House of Commons, Tory MP Harriett Baldwin, says "there are still a lot of risks in terms of inflation".

She says that a lot of the price pressure came from Vladimir Putin’s "evil invasion of Ukraine", but "it does look like some of that pressure has passed".

Appearing on the Today programme on BBC Radio 4, she is then pressed on whether she believes nurses should receive a pay rise.

The Royal College of Nursing is carrying out strikes in England, Wales and Northern Ireland on Thursday and calling for a pay rise of 19.2%, that ministers say is unaffordable.

Baldwin says it's not her place to comment, but adds that inflation "is the most insidious tax you can have on poor people".

"We need to, collectively as a country, make sure it doesn't become deeply embedded through wage price spirals," she says.

While the latest figures on the rising cost of living came in better than experts had anticipated, reaction on the financial markets has been fairly muted so far.

The pound is steady against the dollar, trading down 0.1% at $1.235.

It had spiked to the highest level seen since mid-June yesterday, after new figures in the US showed that prices are slowing there too were published and saw the dollar weaken.

The UK's central bank, the Bank of England, has a target to keep inflation at 2% - although current price rises are about five times that.

Typically, it raises interest rates in response to rising prices. This can encourage people to save, but means some people with variable rate mortgages see their monthly payments go up.

Putting up interest rates also makes borrowing more expensive and - it is hoped - means people have less money to spend. As a result, they are likely to buy fewer things, slowing prices rises.

In November, the Bank put up interest rates to 3%, the highest level seen since 2008, when the UK banking system faced collapse.

Its next interest rate decision is set to be announced tomorrow. But with price increases easing, some experts have questioned if they need to carry on putting rates up at such a pace.

Faisal Islam
Economics editor

The dip in the overall rate of inflation in the year to November should be the start of a few months of falls. October’s four-decade high now looks to have been the peak. But cost increases will remain very high for months to come.

Even in the latest figures, food price rises reached new 45 year highs of 16.5%, as is evident in the shops.

But it's not just petrol prices contributing to a slowing of the inflation rate. Other commodity prices and transport costs are on their way down. The fall in the price of used cars - one of the first indicators of the inflationary pressures last summer - is now accelerating.

While households still face an historic squeeze from the cost of living, the Bank of England may feel able to slow up on rises in interest rates, especially given expectations that a recession has already started. In the absence of further shocks to the world economy, it may be that the very worst is now behind us.

Unite, the UK's biggest private sector union, says this morning's inflation figures "confirm that workers face a bleak midwinter".

The union's general secretary Sharon Graham says: "Although the inflation rate has eased very slightly, the cost of living is still close to a 40 year high," Graham says in a statement.

She says "wages still trail behind price rises," with families and communities "being set up to pay the price of a crisis not of their making."

"This out of touch government is on a collision course with everyday people and Unite stands ready to defend workers by all and every means.”

The Liberal Democrats' Treasury spokeswoman, Sarah Olney, says inflation is "wreaking havoc" on the country, with bills continuing to "skyrocket out of control".

"Under the Conservative government double-digit inflation has become the grim norm," she says in quotes cited by PA.

"Every Conservative chancellor in post this year has done nothing to stop sky-high prices hitting struggling families and pensioners.

"Their track record on the cost-of-living crisis has been nothing short of a disgrace, especially as their latest budget hiked taxes on Britain's hardworking middle.

"Enough is enough, this economic chaos needs to end now."

Experts had predicted that inflation, the rate at which prices rise, would go up by 10.9% in the 12 months to November.

The official figures out this morning showed that the number stood at 10.7% - so how have they reacted?

Yael Selfin, chief economist at KPMG UK, said that it was still a "key risk" for the UK economy, with the chance that rising costs could become more persistent as price rises are passed on to customers more widely.

The head of research for the British Chambers of Commerce, David Bharier, said that price rises would still be felt for months to come.

"Our research shows that inflation remains by far and away the number one concern for businesses. Even if the rate of increase starts to slow, the damage to business confidence has been significant," he added.

But Paul Dales, chief UK economist at Capital Economics, suggested that price rises could have peaked.

He said the fact prices fell across several categories like second-hand cars, while increases for clothes and shoes stalled, was "encouraging", but he did not expect the Bank of England will be "complacent" when it comes to bringing inflation down further.

Our personal inflation calculator, built by the Office for National Statistics in collaboration with the BBC, shows you what the inflation rate is for your household, and identifies the items in your household budget that have gone up the most in price over the past year.

It's a handy tool to work out how you might want to rethink your budget, which you can use here.

It's too early to say we're past the peak of inflation, despite the rate dropping to 10.7%, Grant Fitzner, chief economist at the Office for National Statistics (ONS), says.

"Some may be calling this a peak. It is, I think, too early," he tells BBC Radio 4's Today programme.

"We’ve only seen one fall from a 40 year high, so let’s wait a few months."

While it's important to acknowledge a small fall in the annual rate of inflation, he points out that price levels "remain elevated".

"What’s changed is the rate of change in the most recent month compared with a year ago," he reminds people.

"We will look with interest to see how prices trend in the coming months," he adds.

Nick Eardley
Chief political correspondent

The prime minister has made tackling inflation the key economic test for his government.

Ministers know they will be judged on the extent to which they can deliver.

But these figures also get to the heart of why we are seeing so much industrial unrest at the moment, with strikes across the economy.

The chancellor is arguing this morning that if the government makes the wrong decisions, high prices will last longer and that will be painful for millions.

Ministers believe high wage increases will make inflation harder to tackle.

As one Treasury officials put it to me: “It’s painful now, but it will get easier.”

Unions, though, will argue that if prices are going up 10%, their members need better settlements to deal with cost of living pressures.

That is proving to be a debate that’s hard to solve.

Image source, Getty Images

The latest figures also tell us a bit more about the cost of food, which lots of us have noticed going up at the till.

According to the Office for National Statistics, the price of food and non-alcoholic drinks went up by 16.5% in the 12 months to November - up slightly from 16.4% in October. It marks the highest rate seen since 1977.

The biggest factor pushing up costs came from bread, although a slowing in rise in the cost of fruit partially off-set the increase.

If you're looking for extra tips or advice on budget recipes and how to make your food shop go further, visit the BBC Food website.

Labour's Shadow Chancellor, Rachel Reeves, says the release of this morning's inflation figures will have people asking themselves whether they "feel better off under the Tories?"

"The answer will be no," she writes in a tweet, external.

"Labour will get our economy growing, so that living standards can go up and so we can lead on the global stage."

Chancellor Jeremy Hunt has just put out a statement on the latest figures on the cost of living.

He said that the aftershocks of the pandemic and the conflict in Ukraine meant that high costs were "plaguing economies across Europe".

He also acknowledged that families and businesses are struggling here in the UK.

“Getting inflation down so people’s wages go further is my top priority, which is why we are holding down energy bills this winter through our Energy Price Guarantee Scheme and implementing a plan to help halve inflation next year," he added.

“I know it is tough for many right now, but it is vital that we take the tough decisions needed to tackle inflation - the number one enemy that makes everyone poorer. If we make the wrong choices now, high prices will persist and prolong the pain for millions.”

We're digging into those official figures just released on the cost of living.

Although the rate at which prices rise eased slightly more than expected in the 12 months to November, the increase in the cost of living still remains close to a 40-year high.

The Office for National Statistics said the fact that fuel prices are rising by less than this time last year was part of the reason for the drop, as well as second-hand cars. But that has been off-set by increases for alcohol in restaurants, cafes and pubs.

The UK inflation rate dropped slightly to 10.7% in November, down from 11.1% in the year to October, according to new figures just released by the Office for National Statistics, external.

But, the increase in the cost of living is still close to a 40-year high.

We'll bring you more as we dig into the numbers.