Cost of Living on The Rise In UK As Inflation Skyrockets

UK annual inflation climbed further above the Bank of England’s target rate in November, official data showed Wednesday, firming expectations that it will avoid cutting interest rates this week.

The Office for National Statistics said in a statement that the Consumer Prices Index reached 2.6 per cent in the 12 months to November, up from 2.3 per cent in October.

The BoE, which decides on rates Thursday, has an inflation target of 2.0 per cent.

The data is a blow to the Labour government, which has found efforts to grow the economy come unstuck since winning power in July.

“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 reaction to the inflation data.

On a monthly basis, CPI rose by 0.1 per cent in November compared with a fall of 0.2 per cent a year earlier, the ONS added.

The largest upward contribution to the monthly change came from transport, it said.

“The further rebound in CPI inflation… could have been worse,” noted Paul Dales, chief UK economist at Capital Economics research group.

“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.”

The central bank last month trimmed borrowing costs by 25 basis points to 4.75 per cent.

That came after the BoE reduced it key rate in August for the first time since early 2020, from a 16-year high of 5.25 per cent as UK inflation returned to normal levels.

SOURCE: AFP