UK inflation rises to 6-month high in November

| December 14, 2010 | 0 Comments

The Office for National Statistics (ONS) has today announced Consumer Price Inflation (CPI) rose to an annual rate of 3.3% in November, up from 3.2% in October.

The latest figure represents the highest since May and inflation has now been above the target of 2% for a year.

Meanwhile, toady’s figure surprised analysts who had expected CPI to hold steady at 3.2%.

However, Governor of the Bank of England, Mervyn King, has previously said inflation could reach 3.5% - due to the forthcoming VAT rise.

The central bank does, however, believe inflation will fall below its target by early 2012.

On a monthly basis, meanwhile, consumer prices rose 0.4% – marginally higher than the 0.3% which was widely expected.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, unexpectedly rose to 4.7% in November - a three-month high.

Inflation has remained stubbornly high over recent months and at the last six interest rate meetings, policymaker Andrew Sentance voted for rates to be lifted from their current historic low of 0.5% – where they have been since March 2009.

The CPI inflation rate is a benchmark for the Bank of England’s Monetary Policy Committee (MPC) but the Bank has already noted that inflation has remained more persistent than it had expected but a hike in interest rates are not required at this time.

However, Mr Sentance has previously warned that the Bank faces losing its credibility if it is not seen to be fighting inflation.

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