The annual rate at which prices rise slowed to 3.9% in the month, down from 4.6% in October, according to the ONS.

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It comes following peaks of 11.1% last October.

The figures will come as a boost to households which will see the cost of everyday essentials rise at a slower pace.

It comes after the Bank of England held its base rate last week, maintaining it at 5.25%.

The latest figures means the Prime Minister Rishi Sunak has further met his promise to half inflation by the end of 2023.

Chancellor of the exchequer Jeremy Hunt said: “With inflation more than halved we are starting to remove inflationary pressures from the economy.

“Alongside the business tax cuts announced in the Autumn Statement this means we are back on the path to healthy, sustainable growth.

“But many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures.”

The ONS said the biggest driver for inflation slowing was a fall in the price of fuel, food and household goods.

Meanwhile, the cost of raw materials fell by 2.6% in November, unchanged from the month before.

The cost of factory goods fell by 0.2%, up from a decrease of 0.3% in October.

Dean Butler, managing director for Retail Direct at Standard Life, said “times are still tough for many”, but the latest figures would be welcomed by consumers.

He added: “Inflation falling further than expected will take some of the strain off struggling households and some people think it could lead to the Bank of England lowering the base interest rate next year, which would help people with mortgages or unsecured debt, like payday loans or credit cards.”

The latest figures come after the Bank of England kept its base rate unchanged at 5.25% last week in a boost for households.

The Bank raises and drops its rate to control inflation, but high interest rates are generally passed onto mortgage owners.

The Governor of the Bank, Andrew Bailey, stressed there is “still some way to go” to drag inflation down to its 2% target, and has hinted its base rate is likely to remain “restrictive for an extended period of time”.

He said: “We’ve come a long way this year, and successive rate increases have helped bring inflation down from over 10% in January to 4.6% in October, but there is still some way to go.

“We’ll continue to watch the data closely, and take the decisions necessary to get inflation all the way back to 2%.”

There have been calls to drop the base rate after GDP, a measure of growth in the UK economy, shrunk by 0.3% in October.

Economists had expected GDP to contract by just 0.1% but the figures could reignite concern the UK economy is heading for recession.

What slowing inflation means for your money

Inflation is a measure of how much a basket of everyday essentials is rising by, so the lower the figure, the better it is for your pocket.

However, despite inflation falling to 3.9% last month, it still means the price of goods is rising, just at a slower rate.

Lily Megon, policy direct at My Pension Expert, said

Lily Megson, Policy Director at My Pension Expert, said: “Inflation continues to head in the right direction as year-end approaches. However, the cost-of-living crisis has plagued budgets throughout 2023 – household finances are unlikely to bounce back immediately.

“The same will be the case for pension planners. Particularly in the run up to the new year, many Britons will be reconsidering their retirement finances and trying to plan for the future. A challenge to say the least, given the unpredictability of the UK’s economic performance.

“It is therefore vital that the government step up and take the strongest measures to support individuals on their financial journey, particularly by addressing broader cost-of-living challenges. In 2024, the emphasis should be on boosting pension engagement, increasing access to financial advice, and promoting effective financial planning, ensuring all savers can navigate complexities with confidence.”