Britain's headline inflation accelerated at its fastest pace in eight months, potentially making the case for the Bank of England to keep interest rates steady in its closely watched monetary policy decision on Thursday. The UK's annual inflation rate increased to 2.6% in November from 2.3% in October, with data from the Office for National Statistics published Wednesday.
The latest figure was in line with the consensus estimate. It also marks the second consecutive month of rising inflation, moving farther from the BoE's 2% target rate. On a monthly basis, consumer prices edged up 0.1%, matching analyst forecasts and easing from the previous 0.6% increase. Excluding the prices of food, energy and other volatile items, the British inflation rate jumped to 3.5% year over year from 3.3%, lower than the expected 3.6%.
The reading marks the highest since August. Month over month, core consumer prices recorded zero growth. ONS data indicates that the largest upward effect came from the transport segment, reflecting price movement in motor fuels and secondhand cars. "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," ONS Chief Economist Grant Fitzner said. With November's inflation print and the latest labor market data, analysts do not expect the BoE to rush to ease the monetary policy compared with the US Federal Reserve and the European Central Bank. "In essence, the view from a market perspective is that UK inflation is at risk of proving stickier than in the US and the Euro Area, so the BoE likely won't be able to cut as aggressively as the Fed or ECB, with investors now only expecting 53bps of cuts by the time of the November 2025 meeting," Deutsche Bank noted..