A Royal Exchange queue is dressed up for Christmas at a bank in the City of London, the capital’s financial district, on November 20, 2024 in London, England.
By Richard Baker Photography | Getty Images
LONDON – Britain’s inflation rate rose to 2.6% in November, the Office for National Statistics said on Wednesday, the second consecutive monthly rise in the headline figure.
The figure was in line with economists polled by Reuters and up from 2.3% in October.
Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.5%, slightly below Reuters’ forecast of 3.6%.
The rate of increase in major prices hit a three-and-a-half-year low of 1.7% in September, but is expected to rise further in the coming months, in part due to a higher cap on energy prices set by regulators this winter. It was expected.
“This upward trajectory will continue in the coming months,” Joe Nellis, an economic adviser at accounting firm MHA, said in emailed comments Wednesday, citing energy markets and “long-term pressures from tight domestic labor markets.” Deaf,” he said.
Mr Nellis added that these structural problems, including pressure on businesses through public sector pay increases, minimum wage hikes and higher taxes on employers, were “further exacerbated by recent decisions taken by the government”.
Money markets are pricing in almost zero chance of a rate cut at the Bank of England’s final meeting of the year on Thursday, as inflation persists in the services sector, a key part of the UK economy. That view solidified earlier this week when the ONS reported that regular wage growth had strengthened to 5.2% in the August-October period from 4.9% in the July-September period.
Statistics for November showed that the service inflation rate remained flat at 5%.
Research group Capital Economics said the publication “categorically rules out” a BOE rate cut in December.
However, George Dibb, associate director of economic policy at the Public Policy Research Institute (IPPR), said in an email that overall inflation is broadly in line with BOE projections.
“The real concern is that UK growth has been weaker than expected and is now below the central bank’s own forecasts,” Dibb said.
The UK economy unexpectedly contracted by 0.1% in October, the second consecutive month of negative growth.
Following the print release, the British pound fell 0.06% against the US dollar and 0.19% against the euro.
If the BOE leaves monetary policy unchanged in December, it will end the year with just two cuts in its key policy rate, taking it from 5.25% to 4.75%. Meanwhile, the European Central Bank has enacted four quarter-point cuts and this month signaled a firm intention to cut rates next year.
The U.S. Federal Reserve is widely expected to cut interest rates by a quarter of a point at its own meeting on Wednesday, making the full year’s total interest rate cuts in points. There is some skepticism about whether this step should be taken given inflationary pressures.
