Inflation fell by more than expected last month to its lowest level in more than two years, official figures show, in a sign that the Bank of England will have room to cut interest rates earlier next year.

The consumer prices index fell to 3.9pc in November, down from 4.6pc in October, according to the Office for National Statistics. Economists had predicted a fall to 4.3pc.

The fall in price rises comes as recent data show that wage growth slowed at the fastest pace for two years in the three months to October.

This has reinforced forecasts for interest rate cuts, which would deliver a boost to households preparing to remortgage their homes.

Financial markets are now pencilling in just over four reductions in borrowing costs next year from their present level of 5.25pc, starting by May.

However, the Bank of England’s deputy governor Ben Broadbent said earlier this week that there needs to be clearer evidence that wage growth is slowing before policymakers can think about cutting rates - a sentiment echoed by fellow deputy governor Sarah Breeden on Tuesday.

Read the latest updates below.