Financial News: UK Inflation Highest In 8 Months

UK Inflation Highest In 8 Months

12/18/2024 - 06:42:00 (RTTNews)

(RTTNews) - UK consumer price inflation accelerated to an eight-month high in November, reinforcing the chances of the Bank of England deciding to keep the interest rate unchanged on Thursday.

The consumer price index rose 2.6 percent year-on-year following a 2.3 percent gain in October, the Office for National Statistics reported Wednesday. The rate matched expectations and it remained above the 2 percent target for the second straight month.

Core inflation, which excludes prices of energy, food, alcohol and tobacco, advanced to 3.5 percent from 3.3 percent. This was slightly below forecast of 3.6 percent.

The CPI goods rose 0.4 percent on year, reversing a 0.3 percent fall. Meanwhile, services inflation, which is closely watched by policymakers for signs of lingering price pressures, held steady at 5.0 percent.

Monthly inflation softened to 0.1 percent, in line with expectations, from 0.6 percent in the previous month.

In November, the <a href=https://www.rttnews.com/3488852/bank-of-england-cuts-rate-by-25-bps-future-easing-to-be-gradual.aspx target=_blank >Bank of England</a> had reduced its benchmark rate for the second time this year citing the continued progress in disinflation.

The bank rate currently stands at 4.75 percent. The central bank is widely expected to maintain status quo on December 19.

Today's data means the BoE will stay the course at this week's meeting, ING economist James Smith said. The bank will keep rates on hold and offer no major hints on what will come next, beyond re-affirming its commitment to gradual cuts, the economist added.

Inflation figures coming on the back of the stronger-than-expected rise in wage growth indicate that there is almost no chance of the BoE delivering an early Christmas present of another interest rate cut tomorrow, Capital Economics' economist Paul Dales said.

Separate data from the ONS showed that factory gate prices declined 0.6 percent annually, following a revised 0.9 percent drop in October. The annual fall in input prices slowed to 1.9 percent from 2.4 percent. Monthly input prices were unchanged in November following a 0.1 percent gain. At the same time, output prices rose 0.3 percent after a revised 0.1 percent decrease.

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