UK inflation continued its upward climb in November, surpassing the Bank of England’s target, according to official figures released on Wednesday. The Consumer Prices Index (CPI) rose to 2.6% in the year to November, up from 2.3% in October. This increase strengthens expectations that the Bank of England will refrain from cutting interest rates during its upcoming decision this week.
The Bank of England’s target inflation rate is 2%, making the recent data a setback for the Labour government, which has faced difficulties in revitalizing the economy since taking office in July.
Finance Minister Rachel Reeves responded to the inflation data, stating, “I know families are still struggling with the cost of living, and today’s figures highlight that for too long, the economy has failed to work for working people.”
On a month-to-month basis, CPI rose by 0.1% in November, compared to a 0.2% drop in the same period last year. The biggest contributor to the monthly rise was transport costs.
Core CPI, which excludes energy, food, alcohol, and tobacco, rose by 3.5% in November, up from 3.3% in October.
Commenting on the data, Paul Dales, Chief UK Economist at Capital Economics, noted, “The continued rise in CPI inflation could have been worse, but combined with stronger-than-expected wage growth, the likelihood of an interest rate cut tomorrow is almost nonexistent.”
The Bank of England lowered borrowing costs by 25 basis points to 4.75% last month, following its first rate cut in August since early 2020, after inflation showed signs of returning to more normal levels.
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