Shoppers wearing protective face masks walk through the rain on Oxford Street in London on June 18, 2020, while some non-essential retailers reopen after the coronavirus phase-out.
Tolga Akmen / AFP / Getty Images
LONDON – Inflation in the UK climbed to a 10-year high in November as consumer prices continued to shoot ahead of the Bank of England̵[ads1]7;s crunchy monetary policy meeting on Thursday.
The consumer price index rose by 5.1% during the 12 months to November, up from 4.2% in October, which in itself was the steepest rise in a decade and more than double the central bank’s target.
Economists asked by Reuters had expected a reading of 4.7% for November, and the Bank of England had estimated that inflation would reach 5% in the spring of 2022 before moderating towards the target of 2% in late 2023.
On a monthly basis, inflation in the UK rose 0.7% in November from October, above a Reuters poll with an increase of 0.4%.
The core CPI, which excludes volatile energy, food, alcohol and tobacco prices, rose by 4% year-on-year against a Reuters forecast of 3.7% and 0.5% month-on-month against a 0, 3% forecast.
The Bank of England’s Monetary Policy Committee will meet on Thursday to decide whether monetary policy will be tightened, with inflation rising and the labor market remaining robust, but the rapid spread of the omicron Covid-19 variant has created new uncertainty about the economic upturn in the short term.
MPC defied market expectations in November by voting 7-2 to keep interest rates at their all-time low of 0.1%, but analysts disagree on whether it will pull the trigger on interest rate hikes on Thursday in light of the rise of omicron.
“Unfortunately for consumers, peak inflation may still be a few months away. Today’s KPI data only serves to increase pressure on the Bank of England to raise interest rates at its MPC meeting tomorrow,” said Richard Carter, head of fixed rate analysis at Quilter Cheviot.
“However, the Bank of England may well decide that discretion is the best part of bravery and instead choose to wait until next year given the current uncertainty surrounding the effect of the Omicron variant on the economy, combined with the risk that further restrictions may need to be introduced. soon.”