According to the report from the Office for National Statistics (ONS), in November consumer prices rose by 2.6% per year, as expected, after an increase of 2.3% per year in October. As a result, inflation reached its highest level since March. On a monthly basis, the consumer price index rose 0.1%, slowing sharply compared to October (+0.6%), and confirming economists' forecasts.
The ONS said that the largest upward contribution to the CPI annual rates came from transport, with a further large upward effect from housing and household services. Prices rose at a faster pace for recreation and culture (3.6% vs 3% in October), housing and utilities (3% vs 2.9%) and food and non-alcoholic beverages (2% vs 1.9%). In addition, transport prices fell by 0.9% after a 1.9% decline in October.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - accelerated to 3.5% per annum (the highest value since August) from 3.3% per annum in October. Consensus estimates suggested an increase by 3.6% per annum. The CPI services annual rate remained steady at 5.0%, while the annual CPI goods rate rose by 0.4% after a 0.3% decline in October. Persistent inflation in the services sector, the dominant part of the U.K. economy, has led money markets to price in almost no chance of an interest rate cut during the Bank of England’s final meeting of the year on Thursday.
On a monthly basis, core consumer prices remained unchanged, compared with the 0.4% increase in October. Economists had expected an increase of 0.2%.