We're now wrapping up our coverage, but before you go let's take a look at some of today's main headlines.

• The Office for National Statistics (ONS) announced that the latest inflation figure for the UK is 3.9%, making it the lowest annual rate of price rises in more than two years
• Staples such as pasta, milk and butter were identified as some of the main items that saw slowing price rises
• Inflation is now well below its peak in 2022, but it is still almost double the Bank of England's 2% target
• Chancellor Jeremy Hunt said the UK is "back on the path to healthy sustainable growth"
• Shadow chancellor Rachel Reeves welcomed the drop but said the Tory government's "economic failure" have left working people "still worse off"

If you want to read more about the biggest factors behind the inflation drop - from second-hand car sales to the bread and cakes - go here.

To find out your personal inflation rate, you can use our calculator (developed with the Office for National Statistics) here.

And with Christmas just a few days away, find out more about how much you're likely to spend on food bills for your festive dinner here.

Today's coverage was edited by Nadia Ragozhina and Nathan Williams. Our writers were Ece Goksedef, Derbail Jordan and Malu Cursino.

Following today's better-than-expected inflation figures, financial markets are now more confident in betting that the Bank of England will cut interest rates sooner rather than later - and they reckon the first snip could come as soon as next May.

The Bank, led by governor Andrew Bailey, has been at pains to say that there will be no cuts unless inflation has been brought back to its 2% target.

But James Smith, developed markets economist at ING, the banking group, says: "Markets are right to be pricing a number of rate cuts for 2024."

He says some investors believe the Bank of England could begin cutting interest rates - currently at 5.25% - in May.

Though if it remains cautious, the Bank may prefer to wait until August, he says.

While lower interest rates benefits borrowers and mortgage-holders, it means that savers lose out on better returns.

Image source, Reuters

Your finances in 2024published at 10:28 Greenwich Mean Time 20 December 2023

10:28 GMT 20 December 2023

Kevin Peachey
Cost of living correspondent

Individual’s finances could head down different paths as we go into next year.

Many workers will be relieved that wages are rising at a faster rate than inflation, which means they will be getting better off in real terms.

But interest rates remain high, so borrowing money is still expensive.

That’s a strain particularly for those who have been borrowing to pay essential bills - which, for energy in particular, are still expensive.

So, experts say the new year is a good time to pay close attention to your finances, review your budget, and seek help If you are really struggling.

The owner of a Coventry fuel and convenience shop has seen the price of fuel slightly drop recently, and is passing that onto his customers.

Paul Cheema, who runs a store in Coventry, explained to BBC Radio 5 Live how he tracks the price of fuel in order to give his customers the best deal.

“We're cheaper than Sainsbury's today. We can never beat Costco, but they have other ways of doing it," says Cheema.

“You see what other forecourts are doing. So I think for where we are located in our area, we're passing that saving on to our shoppers.

“But no, we've been tracking it and we've been bringing it down. Today, we're 136.7 on unleaded”.

In light of recent Red Sea attacks, which have impacted the shipping of goods worldwide, Cheema said he is worried about the cost to run an independent site nowadays.

“If it [the price of fuel] goes up, we unfortunately have to pass it on now ... the cost to serve an independent site now is so much".

Sunak hails inflation drop ahead of election yearpublished at 10:12 Greenwich Mean Time 20 December 2023

10:12 GMT 20 December 2023

Henry Zeffman
Chief political correspondent

Inflation falling to its lowest level in more than two years is certainly good news for the government.

Prime Minister Rishi Sunak hailed it this morning as "good news for everyone in this country", in fact.

That's clearly true: prices are rising more slowly than they otherwise would have.

There is a political opportunity for the government here as they enter a general election year: to argue that their economic approach is working — although plenty will argue that the biggest levers for controlling inflation are pressed by the Bank of England.

But there are potential political risks here too.

Sunak and the Conservatives will have to be careful that their rhetoric does not run too far beyond people’s experiences. Inflation is coming down – but many are still leaving fixed-rate mortgages onto new rates, for example, or facing increased energy bills.

Buried within today's inflation figures is this bon mot - second-hand car prices are falling.

On a monthly basis, prices for old bangers fell 2.1% between October and November.

Compared to last November, prices slowed by 5.4%. That's a steeper fall than the 3.6% drop recorded in the year to October.

So that's better news for bargain-hunters though perhaps not so great for used car sales folks?

Are mortgage rates set to fall?published at 09:57 Greenwich Mean Time 20 December 2023

09:57 GMT 20 December 2023

Kevin Peachey
Cost of living correspondent

A bigger than expected fall in the rate of inflation may bring a little relief to those looking for a new mortgage deal.

While the Bank of England may not be cutting the benchmark interest rate any time soon - it is currently 5.25% - lenders may have more confidence to offer deals at lower rates.

That’s because brokers say there is likely to be a further fall in so-called swap rates, which underpin mortgage pricing.

But remember that for the vast majority of the 1.6 million people who are re-mortgaging next year, their repayments are still likely to be quite a bit higher than on their current deal which would have been taken out when rates were ultra low.

Image source, .

Inflation rates in the UK have been stubbornly high and gradually coming down since their peak at 11.1% in October 2022.

The Covid pandemic and war in Ukraine have contributed to high inflation across the globe, but the UK had struggled bring inflation down to the rates seen in other Western economies.

Today's 3.9% figure has been celebrated by economists and analysts as the lowest annual inflation rate for two years. It is important to note that prices are still increasing, but at a lower rate than previously - things costing £1 in November 2022 cost almost £1.04 this year.

So, how does the UK compare to other countries?

• The UK now has the same inflation rate as France, at 3.9%
• Prices in Germany are rising at a 2.3% rate
• In the US, the figure is slightly lower at 2.1%
• And in Italy, prices are rising by 0.6%

Image source, Getty Images

Welcome. This morning the Office for National Statistics (ONS) announced that the latest inflation figure for the UK is 3.9% - the lowest annual rate in more than two years.

• Slowing price rises for food, including staples such as pasta, milk and butter, as well as for household goods were also behind the fall. Falling inflation does not mean most goods and services are cheaper, but rather prices are rising less quickly
• Grant Fitzner, chief economist at the Office for National Statistics (ONS), said that while UK inflation had eased again, "prices remain substantially above" what they were before Russia's invasion of Ukraine
• However, the gap between the UK and its neighbours in the European Union is narrowing, Fitzner told the BBC, as the country's latest inflation figure is the same as France (3.9%)
• While inflation is now well below its peak in 2022, it is still almost double the Bank of England's 2% target
• Chancellor Jeremy Hunt said the UK is "back on the path to healthy sustainable growth", but he acknowledged that many families are still struggling with high prices
• While Labour welcomed the slower price rises, shadow chancellor Rachel Reeves said the Conservative government's "economic failure" have left working people "still worse off"

In many instances, food inflation for basics is falling.

In the year to November, pasta prices dropped by 14.8%.

Four pints of whole milk now costs 7.4% less and butter prices have dropped by 6.6%.

Want to work out how much prices are rising for you? Try our personal inflation calculator here.

A gift from Santa for parents?published at 09:11 Greenwich Mean Time 20 December 2023

09:11 GMT 20 December 2023

Robert Cuffe
Head of statistics

Image source, Getty Images

Overall, the larger than expected fall in inflation is good news before Christmas.

But if you delve deeper into the figures, you might just see the fingerprints of Santa himself.

One of the contributors to the slowdown in inflation was a slight fall in the price of "recreational and cultural goods".

That's a mixture of gigs, sports kit, toys and gardening.

And the biggest contributor to the fall there was games, toys and hobbies.

It's hard to know how Santa would directly influence the prices in shops in the UK, and the North Pole wouldn't share any details.

A spokes-elf said that Santa is "committed on delivering his priorities (and presents): making a list; checking it twice; finding out who's naughty or nice and coming to town".

We're now drilling down into the minutiae of the new inflation figures and have a bit more information on food prices.

Between October and November, the price of bread and cereals fell by 0.8%.

Compared to last November, however, the price of most types of bread that the ONS tracks to work out the pace of inflation have gone up.

So, for example, the average price for a large white loaf was £1.61 in November but in the same month last year, it was £1.47.

The biggest price rise was for crumpets. In November last year, the average price for a packet of those delicious treats was 85p. Last month, you'd be paying £1 for your crumpets. That's a rise of 17%.

In fact, the only product where there was a slight drop in average annual prices was for a slice wholemeal loaf - but that only fell by 1p.

Image source, Getty Images

Another key point in today's data is something called "core inflation".

This strips out the price of things such as energy, food, alcohol and tobacco which can be volatile and swing wildly from month to month.

It is also a figure that the Bank of England pays close attention to when it decides whether to raise, hold or cut interest rates.

These latest figures show that core inflation slowed to 5.1% in the year to November, down from 5.7%. This was a shaper slowdown than many economists expected.

Don't expect changes to interest rates any time soon though. The Bank of England's next meeting is not until February next year.

Don't forget mortgages and credit cardspublished at 08:38 Greenwich Mean Time 20 December 2023

08:38 GMT 20 December 2023

Robert Cuffe
Head of statistics

The headline measure of inflation, the Consumer Price Index (CPI), misses a lot of things that feature heavily in your budgeting.

It doesn't include interest payments on credit cards or mortgages.

They are left out because CPI is tailored for policymakers who set interest rates to target inflation.

CPI also gives less weight to poorer families, who have been hit hardest by rising food and energy bills because they spend a bigger share of their money on those things.

As more people come off low fixed rate mortgage deals, and others borrow for Christmas this difference becomes more important, says Dr Sarah Cumbers, the Royal Statistical Society's chief executive.

Thankfully, we're now getting a measure that captures the cost of living better, but it's not published as often.

The latest figures, for September, put cost of living rises for households about 1.5 percentage points higher than the headline CPI rate.

Grant Fitzner, chief economist at ONS, has just been speaking to our colleagues at BBC Radio 4's Today programme.

"It is good news for a change," Fitzner says as inflation is now at 3.9% - down from 4.6% the previous month.

Fitzner says a drop in core inflation - which excludes the price of energy, food, alcohol and tobacco - is a factor that "would be encouraging" to the Bank of England and other financial commentators.

As reported a little earlier, the latest figures are the lowest annual inflation rate in two years - but remain well above the Bank's 2% goal for the end of 2023.

But in an optimistic tone, Fitzner says that while "UK inflation still remains above the European Union average, that gap has narrowed".

"We're now at the same inflation rate as France," the chief economist adds.

Image source, .

Every month there's a new figure for inflation - it estimates how much prices are rising across all the goods and services in the economy.

As we've been reporting, in the 12 months to November 2023 the figure was 3.9%. That means things costing £1 in November 2022 cost almost £1.04 the same time the following year.

Our personal inflation calculator, built by the Office for National Statistics (ONS) 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.

• You can check your personal inflation rate here.

Image source, Reuters

Shadow chancellor Rachel Reeves has also been reacting to today's headline figure, calling the fall in inflation - to 3.9% - "a relief to families".

But she says that "13 years of economic failure under the Conservatives" have left working people "still worse off".

"Prices are still going up in the shops," Reeves says, as while food inflation eased to 9.2% prices are still going up.

Fall to 3.9% puts us on level pegging with Francepublished at 08:05 Greenwich Mean Time 20 December 2023

08:05 GMT 20 December 2023

Dharshini David
Chief economics correspondent

Despite the unexpected scale of the fall in November, we still have a relatively persistent inflation problem compared to peers – although the gap is narrowing.

The fall to 3.9% puts us on level pegging with France – but ahead of the EU’s average rate of 3.1% and the US’s 2.1%, looking at the most closely comparable figures. It’s why analysts think the Bank of England will be slower to cut rates than other major central banks.

Tempted to drown those sorrows?

One more detail from the release: as anyone tempted to stock up for Christmas early may have noticed, alcohol and tobacco inflation was still above 10% in November – making it the most painful category on the inflation charts last month.

Image source, Getty Images

Pressure on Bank of England to cut interest rates fasterpublished at 07:53 Greenwich Mean Time 20 December 2023

07:53 GMT 20 December 2023

Faisal Islam
Economics editor

This is a chunky easing in the rate of inflation to below 4%, bringing the UK back towards the range of other major economies.

Falling petrol prices were the biggest factor. Underlying measures of inflation, which give a better measure of how long price pressures will last, also fell back to between 5-6%. While inflation is still just under double its target, it is now at its lowest rate for over two years.

This headline number will increase pressure on the Bank of England to cut rates more rapidly next year than it has indicated so far.

But numbers early in the new year are likely to be bumpy, with domestic energy bills due to go up a little in a fortnight.

Food prices are still rising by over 9%. Inflation is still with us, but the energy shock is now fading.

One of the areas where high inflation has hit households is food, particularly staples like bread and dairy products.

The price of things like milk and yoghurt have already started slowing but in these latest figures, the ONS says that the annual rate of price rises for bread - for products such as white and wholemeal sliced loaves - is also easing.

The rate of price rises for cakes also slowed in the year to November.

However, that doesn't mean everything at the supermarket is suddenly cheaper.

Prices are still rising, just not as quickly.

So while the overall rate of inflation for food and soft drinks in the year to November eased to 9.2%, that is still pretty high historically speaking.

Image source, .