Phenol (C$_6$H$_5$OH) reacts readily with dilute NaOH because it is more acidic than water. The reaction is as follows:
\[ \text{C}_6\text{H}_5\text{OH} + \text{NaOH} \rightarrow \text{C}_6\text{H}_5\text{O}^- \text{Na}^+ + \text{H}_2\text{O}. \]
The phenoxide ion (C$_6$H$_5\text{O}^-$) formed is stabilized by resonance, making phenol a stronger acid than water.