Today, the Office for National Statistics (ONS) has released the latest inflation data for the UK revealing that the Consumer Prices Index (CPI) rose by 5.1% in the 12 months to November 2021, up from 4.2% to October. This is the highest CPI 12-month inflation rate since September 2011, when it stood at 5.2%.
According to the ONS, in November 2021 the CPI rose by 0.7% from the previous month, compared with a fall of 0.1% in the same month the previous year. Price rises in transport, and recreation and culture were the largest contributors to the monthly rate in November 2021. The costs of goods produced by factories and the prices of raw materials were also a factor.
Economists polled by Reuters had been anticipating a rise of 4.7% for November so today’s figure of 5.1% has beaten that considerably. The Bank of England, whose Monetary Policy Committee(MPC) meets tomorrow for its monthly meeting to decide on the level of UK interest rates, had projected that inflation would hit 5% in the spring of 2022. Last month, the MPC voted to keep interest rates on hold at 0.1% by voting 7-2.
What will the Bank of England decide tomorrow? They’ve certainly got a difficult decision on their hands. Any decision to raise rates is likely to have a big impact on consumers who are already feeling the strain on household budgets through rising living costs, especially if mortgage costs then rise into the mix. With the Omicron variant being reportedly rising sharply in the UK, this adds to the uncertainty facing the BoE’s committee tomorrow.
The FTSE 100 index had a muted response, opening 0.1% lower as analysts consider all the uncertainty including the latest on the Government’s ‘plan B’ response to the rising Covid numbers.
