Britain’s cost-of-living squeeze will leave an enduring mark

THE WORST of Britain’s most sustained period of high inflation since the 1970s is coming to an end. The headline rate of consumer-price inflation in November fell to an annual pace of 3.9%, its lowest reading in more than two years. That is welcome news for everyone, not least Rishi Sunak, the prime minister, who is set to fulfil his pledge to halve the pace of price rises this year. But the cost-of-living squeeze is not over yet, and some of its effects are likely to endure.Inflation has been above the Bank of England’s target of 2% every month since August 2021; the bank’s monetary policy committee, which sets interest rates, does not expect to hit that target until the end of 2025 (although the lower-than-expected November figure may presage a faster fall). Wages have been growing quickly in cash terms, helping to cushion the blow to incomes, but the hit to households has still been severe. Although real weekly earnings have been broadly flat since the spring, they are still 3.6% below their level in December 2021.