November figures bolster expectations over Bank of England's rate decision tomorrow
The UK’s annual inflation rate increased to 2.6% in November 2024, up from 2.3% in October, remaining above the Bank of England’s 2% target, according to data released by the Office for National Statistics (ONS) on Wednesday.
On a monthly basis, the Consumer Price Index (CPI) rose by 0.1% in November, contrasting with a 0.2% decline during the same month last year.
Core inflation, which excludes volatile items such as energy, food, and alcohol, rose to 3.5% year-on-year in November, compared to 3.3% in October.
The ONS attributed the largest upward pressure on the annual CPI rate to rising transport costs, alongside increases in housing and household services.
“Inflation rose again this month as prices of motor fuel and clothing increased this year but fell a year ago,” said Grant Fitzner, ONS chief economist. “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.”
CPI rose by 2.6% in the 12 months to Nov 2024, up from 2.3% in Oct 2024.
— Office for National Statistics (ONS) (@ONS) December 18, 2024
Read the release ➡️ https://t.co/c7fPzGpIRc pic.twitter.com/xymm6zzBFR
The data marks the final inflation reading of 2024, ahead of the Bank of England’s monetary policy decision tomorrow. Economists now widely expect the central bank to keep interest rates unchanged.
“Inflation ticking up isn’t a present that policymakers had on their Christmas wish lists,” commented Ben Thompson, deputy chief executive at Mortgage Advice Bureau. “It means that we will almost certainly see a hold in the last interest rate decision of the year tomorrow, despite signs that the economy has been slowing down.”
For Paul Noble, chief executive of Chetwood Bank, the latest rise in inflation is “a financial gut punch for Britons preparing for the year’s most expensive season.”
“It comes as no surprise following the uncertainty surrounding October’s budget announcement and could be a sign of a prolonged period of inflation above the government’s target,” Noble said. “All eyes will now be on the Bank of England’s interest rate announcement on Thursday to see how they react to this news.”
Rachael Hunnisett, director of April Mortgages, believes borrowers wishing for a third interest rate cut of the year this Christmas are set to be disappointed.
“November’s rise in inflation will likely rubber stamp the Bank of England’s decision to hold rates at 4.75% on Thursday,” she said. “Although the UK’s poor economic performance has muddied the picture slightly, with fears emerging over a potential recession, it is thought that inflation will need to fall before the bank takes further action.
“The best option for mortgage holders who want greater financial security is to avoid short-term deals that leave them more exposed to payment fluctuations.”
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