Money & Inflation: The numbers moved — but the lived reality is uneven

Inflation headlines can improve while budgets still feel tight.

This week’s “quiet” inflation story is about composition: food, energy bill structure, and what households actually notice.

1) CPI and CPIH both slowed in November 2025

ONS reports:

• CPI: 3.2% (12 months to November 2025)
• CPIH: 3.5% (12 months to November 2025)

Why it matters:

• Lower inflation is good news — but it doesn’t reverse the price level. It only changes the rate of increase.

2) Energy price cap: a small increase into early 2026

Ofgem explains that between 1 January and 31 March 2026, the energy price cap is set at £1,758 per year for a typical household paying by Direct Debit, slightly above the prior quarter’s cap.

Why it matters:

• Even small changes matter when households are already running tight.

3) The hidden driver: what people notice (food prices)

Bank of England research suggests food prices disproportionately influence household inflation expectations.

Why it matters:

• If groceries feel expensive, “inflation is falling” can feel like a fake statement — even when it’s statistically true.

4) A structural bill change: ECO removed from energy bills from April 2026

The UK government states that from April 2026, the Energy Company Obligation (ECO) will no longer be levied on energy bills.

Why it matters:

• This changes the composition of bills, not just the cap level.

Sources (accessed December 2025)

• ONS: Consumer price inflation, UK: November 2025 https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/november2025

• Ofgem: Energy price cap explained https://www.ofgem.gov.uk/information-consumers/energy-advice-households/energy-price-cap-explained

• Ofgem: Changes to energy price cap (Jan–Mar 2026) https://www.ofgem.gov.uk/news/changes-energy-price-cap-between-1-january-and-31-march-2026

• UK Parliament Commons Library briefing: Gas and electricity prices during the 'energy crisis' and beyond https://commonslibrary.parliament.uk/research-briefings/cbp-9714/

• Bank of England working paper: Food prices matter most https://www.bankofengland.co.uk/working-paper/2025/food-prices-matter-most-sensitive-household-inflation-expectations

• Government statement: Energy bill reductions (statement to energy suppliers) https://www.gov.uk/government/publications/energy-bill-reductions-statement-to-energy-suppliers/energy-bill-reductions-statement-to-energy-suppliers

Disclaimer: This article is for general informational and educational purposes only. It does not constitute financial, investment, tax or legal advice and does not take into account individual circumstances.