The Office of National Statistics has released the latest inflation figures.
UK inflation has risen for the second consecutive month in a row in another blow to the new Labour Government.
The Office for National Statistics (ONS) announced Consumer Prices Index (CPI) inflation rose to 2.6% in the 12 months to November, up from 2.3% in the previous month.
Rising motor fuel and clothing prices were among the key drivers behind the increase. Prices for alcohol and tobacco, and recreation and cultural activities also increased.
Commenting on today’s inflation figures, ONS Chief Economist Grant Fitzner said: “Inflation rose again this month as prices of motor fuel and clothing increased this year but fell a year ago.
“This was partially offset by air fares, which traditionally dip at this time of year, but saw their largest drop in November since records began at the start of the century.”
UK inflation rises to 2.6% in second consecutive increase (Image: Getty)
According to the ONS, air fares dropped by 19.3% in November 2024, compared to a 13.9% decline during the same month last year. The decrease was largely driven by lower fares on European routes.
Chancellor Rachel Reeves commented: “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.”
She added: “Since we arrived real wages have grown at their fastest in three years. That’s an extra £20-a-week after inflation. But I know there is more to do. I want working people to be better off which is what our Plan for Change will deliver.”
Responding to the figures, Shadow chancellor Mel Stride said: “The Chancellor has made a series of irresponsible and inflationary decisions which, as the independent Office for Budget Responsibility said, will leave inflation higher than it was forecasted in March.
“These figures mean higher costs in the shops, less money in working people’s pockets and risks keeping mortgage
The Bank of England raises central interest rates to reduce spending and bring inflation down to its government-set target of 2%. Its next decision, widely expected to hold the Base Rate at 4.75%, will be announced on Thursday.
Core inflation, which excludes volatile food and energy prices, rose by 3.5% in the 12 months to November, up from 3.3% in October.
This metric, reflecting the impact of rising prices on consumer income, is a key factor the Bank of England considers alongside the Consumer Prices Index (CPI) when deciding whether to adjust the Base Rate.
Daniel Casali, chief investment strategist at wealth management firm Evelyn Partners, said: “The uptick in annual and core inflation from the previous month makes it unlikely the Bank of England (BoE) will cut interest rates tomorrow.
“The monetary policy committee will be wary that services inflation becomes stuck at an elevated level and particularly after this week’s release of the October higher-than-expected average hourly earnings data, which is correlated to services inflation.”
Chancellor Rachel Reeves said there is “more to do” to combat cost-of-living pressures. (Image: Getty)
Mr Casali added: “Looking further on, the UK inflation trajectory will be complicated by the demand boost from the Budget at the end of October after the Government relaxed fiscal rules. The hike in the National Minimum Wage and Employers National Insurance (both from April) and their impact on encouraging producers to raise prices to maintain profit margins is another consideration for the BoE.
Mr. Casali suggested that “stubborn” inflation might prompt the Bank of England to take a more cautious approach to reducing rates. He noted that while a rate cut is unlikely tomorrow, the first reductions may come at the February 6 and May 8 meetings.
Peter Stimson, head of product at MPowered Mortgages, said: “This is not the Christmas present the Bank of England wanted. Inflation is surging deeper into warning territory and the Bank’s efforts to hold CPI at 2% are unravelling fast.”
Mr Stimson indicated that the Bank’s stance on interest rates will likely need to be “much more hawkish” than anticipated, potentially delaying the next cut until even later in 2025.
He added: “This will be a worry for anyone planning to buy their first home or remortgage in the New Year. While mortgage lenders will try to trim their interest rates in January in an effort to win borrowers’ business, their ability to do so will now be severely constrained.
“The Bank of England’s battle against inflation is back on and the prospect of cheaper mortgages is off the table for now.”
Graham Cox, director at Bridging Hub commented: “Just when inflation appeared to be back in its box, it rears its ugly head again. A 0.3% jump in CPI to 2.6% has surely killed any hopes of a base rate cut this week.
“Most of the increase was higher transport and household costs, and the hope must be that these are only temporary. Teetering on the brink of recession, the UK desperately needs lower interest rates to kickstart the economy.”
Most Popular Comments