UK annual inflation climbed further above the Bank of England's target rate in November, official data showed Wednesday, firming expectations that it will avoid cutting interest rates this week.
The Consumer Prices Index reached 2.6 per cent in the 12 months to November, up from 2.3 per cent for October, the Office for National Statistics (ONS) said in a statement. This is the highest rate since March this year.
The BoE, which decides on rates Thursday, has an inflation target of 2.0 per cent.
The data is a blow to the Labour government, which has found efforts to grow the economy come unstuck since winning power in July.
"I know families are still struggling with the cost of living and today's figures are a reminder that for too long the economy has not worked for working people," chancellor Rachel Reeves said in reaction to the inflation data.
On a monthly basis, CPI rose by 0.1 per cent in November compared with a fall of 0.2 per cent a year earlier, the ONS added.
The largest upward contribution to the monthly change came from transport, it said.
Core CPI - excluding energy, food, alcohol and tobacco - rose 3.5 percent in the 12 months to November, up from 3.3 per cent in October.
"The further rebound in CPI inflation... could have been worse," noted Paul Dales, chief UK economist at Capital Economics research group.
"But coming on the back of the stronger-than-expected rebound in wage growth in yesterday's release, there is almost no chance of the Bank of England delivering an early Christmas present with another interest rate cut tomorrow."
The central bank last month trimmed borrowing costs by 25 basis points to 4.75 per cent.
That came after the BoE reduced its key rate in August for the first time since early 2020, from a 16-year high of 5.25 per cent as UK inflation returned to normal levels.
“Although the public may feel Andrew Bailey and co are channelling their inner Scrooge, prudence on the BoE’s part seems sensible as no one wants to see the inflationary ghosts of Christmas past return,” Isaac Stell, investment manager at Wealth Club said.
“This latest inflationary spike adds to the New Year challenges facing the BoE. With businesses shouldering the chancellor’s National Insurance rises, the indication of prices hikes from companies have been coming thick and fast. There may be cuts to jobs and less generous pay rises to boot. Those hoping to see a continuous stream of rate cuts in 2025 will likely be disappointed.”
