The UK’s annual inflation rate surpassed the Bank of England‘s target rate of 2.0% in November, according to official data from the Office for National Statistics. This raises the likelihood that interest rates will not be cut this week.
“I know families are still struggling with the cost of living, and today’s figures are a reminder that for too long, the economy has not worked for working people,” Finance Minister Rachel Reeves said in response to the inflation report.
Every month, CPI increased by 0.1% in November, compared to a 0.2% decrease the previous year, the ONS reported.
According to the report, transit had the greatest positive impact on the monthly change.
Core CPI excluding energy, food, alcohol, and tobacco increased 3.5% in the year to November, up from 3.3% in October.
According to Paul Dales, chief UK economist at Capital Economics, the recent increase in CPI inflation could have been even worse.
“But coming on the back of the stronger-than-expected rebound in wage growth in yesterday’s release, there is almost no chance of the Bank of England delivering an early Christmas present with another interest rate cut tomorrow.”
Last month, the central bank reduced borrowing prices by 25 basis points to 4.75 per cent. That happened after the BoE cut its benchmark rate in August for the first time since early 2020, from a 16-year high of 5.25% as UK inflation returned to normal levels.
