Key Takeaways
- The Bank of England kept its interest rate at 4.75% as UK inflation rose to an eight-month high.
- Higher transportation and housing costs are significant contributors to the recent rise in UK inflation.
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The Bank of England (BoE) has decided to keep interest rate cuts on hold as UK inflation has risen to its highest level in eight months.
UK inflation edged higher in November 2024, according to data released today by the Office for National Statistics. The Consumer Price Index (CPI) rose to 2.6% in November, up from 2.3% in October, marking the second consecutive monthly increase above the central bank’s 2% target.
The Consumer Price Index including owner occupiers’ housing costs (CPIH), the UK’s preferred measure of inflation, climbed to 3.5% in November from 3.2% in October.
Prices for goods and services in the UK are rising faster than they were in October. This increase is driven by factors like higher transportation costs and rising housing costs. While the overall inflation rate is increasing, the rate of increase has slowed down compared to previous months.
Even though recent inflation figures are not beyond market expectations, and some inflationary pressures may indeed be easing, persistent inflation in the service sector remains a key concern for the central bank.
The services sector, which accounts for around 80% of the UK economy, has shown stubbornly high inflation rates, prompting the central bank to maintain a cautious approach.
Economists…
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