In November, UK consumer price inflation accelerated to its highest level in eight months, bolstering the likelihood that the Bank of England will maintain the interest rate at its current level during their Thursday meeting.
The Office for National Statistics reported on Wednesday that the consumer price index increased by 2.6% compared to the previous year, following a 2.3% rise in October. This rate aligned with expectations and remained above the 2% target for the second consecutive month.
Excluding volatile items such as energy, food, alcohol, and tobacco, core inflation slightly increased to 3.5% from 3.3%, falling just short of the 3.6% forecast.
The CPI for goods experienced a 0.4% annual increase, reversing a 0.3% decline. Meanwhile, services inflation, closely monitored by policymakers for persistent price pressures, held steady at 5.0%.
On a monthly basis, inflation eased to 0.1%, consistent with expectations, from 0.6% the previous month.
Earlier in November, the Bank of England cut its benchmark rate for the second time this year, citing ongoing disinflationary trends. The current bank rate stands at 4.75%, and the central bank is broadly anticipated to maintain this rate on December 19.
According to ING economist James Smith, today's data suggests that the BoE will maintain its current stance at this week's meeting. The bank is expected to hold rates steady and offer no significant insights into future actions, aside from affirming its commitment to gradual rate cuts.
With inflation figures accompanied by stronger-than-anticipated wage growth, Capital Economics' economist Paul Dales asserted that there is virtually no chance the BoE will offer an early Christmas rate cut tomorrow.
Additionally, data from the ONS revealed that factory gate prices decreased by 0.6% annually, following a revised 0.9% decline in October. The annual drop in input prices slowed to 1.9% from 2.4%. Monthly input prices remained unchanged in November after a 0.1% increase. Meanwhile, output prices rose by 0.3% following a revised 0.1% decrease.
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