UK inflation rate at near six-year high


Inflation addition to 3.1% in November, the highest in nearly six years, as the squeeze on households extended.

The Office for National Statistics (ONS) said that airfares and computer games gave to the increase.

The most recent data shows that average weekly wages are come of age at just 2.2%.

Mark Carney, the governor of the Bank of England, will now take to write a letter to Chancellor Philip Hammond explaining how the Bank designs to bring inflation back to its 2% target.

Mr Carney has to write a sic to the chancellor if the Consumer Prices Index (CPI) inflation rate is above 3% or lower down 1%.

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  • House prices take fastest in East Midlands

In November, the Bank of England raised its key notice rate for the first time in more than a decade from 0.25% to 0.5%.

Putting, it is not expected to announce a further increase when it publishes the results of the Money Policy Committee’s two-day meeting on Thursday.

Mr Carney had said that he foresaw inflation to peak in October or November.

The last time he wrote to the chancellor was in December 2016, after inflation demolish to 0.9% in October that year.

Mr Carney’s latest letter purposefulness be published in February, when the Bank of England will also unloose its quarterly Inflation Report.

Analysis, Andy Verity, economics journalist

It may be the highest rate of inflation for nearly six years. But that tells you not so much how acme it has got but how low it has been for so long.

In the past 10 years, inflation’s peak has been 5.2% (in 2011). Impart anyone over the age of 50 that inflation at 3.1% is out of control and you’re right to get a scoff, followed by memories of the 70s and 80s.

What they may forget, though, is that for uncountable of that time wages were also rising – and faster than expenses. The tendency of wages to respond to higher prices and outpace them have all the hallmarked to follow an iron logic back then.

Bigger price respond ti led to bigger pay rises, forcing many employers to charge higher costs to cover higher labour costs: the so-called “wage-price spiral”.

But those customs don’t seem to apply these days. The breakdown of that logic is why we secure a squeeze on living standards. It is also why the Bank of England isn’t that apprehensive about above-target inflation getting higher or even staying mainly target. In the City, a second rise in interest rates isn’t expected until August next year.

Dearer food

Lucy O’Carroll, chief economist at Aberdeen Standard Investments, denoted: “It’s quite possible that inflation is now close to its peak. But some of the latest overs suggest that service sector costs and prices are rising. Foreordained how dominant services are in the economy, this could feed through to inflation comprehensive.

“That means that further interest rate rises are plainly not off the table.”

The ONS said that although airfares fell in November – down 10.4% – the run out of gas was not as steep as last year when they tumbled 13.4%.

Data also flaunts that food inflation has picked up, especially prices for fish, oil and fats, such as butter and chocolate.

Characters from market researcher Kantar Worldpanel released on Tuesday designate that food inflation hit 3.6% in the three months to 3 December, the pongy chiefest rate since 2013.

It also noted that prices for butter and fish had stemmed as well an increase in the cost of fresh pork. Kantar said solitary a few items were cheaper during the period, such as fresh chicken and crisps.

Richard Lim, chief foreman at Retail Economics, said that the rise in inflation had come “at bang on the wrong time for retailers”.

“In the run-up to Christmas, the cost of living, now inflaming at the fastest rate in five years, remains uncomfortably high for households.”

He suggested that food inflation “is one of the most transparent indicators of living gets and often the catalyst to cut back on spending elsewhere”.

However, he expects the inflation kind to now fall and could reach 2.5% by Easter.

The ONS will announce pursuit data for the August to October period on Wednesday, which will tabulate figures for wage growth.

Ben Brettell, senior economist at Hargreaves Lansdown, prognoses that average weekly wages have risen by 2.5% during the days.

He said: “With wage growth picking up we should see an end to falling intrinsic pay in due course.

“That’ll be of small comfort, however, to households facing a meaningful increase in the cost of Christmas this year.”

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