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UK Annual Inflation Marks Fresh 5-year High in November

Published 12/12/2017, 04:31 AM
UK CPI rises 3.1% in November vs. 3.0% forecast
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Investing.com - Consumer price inflation (CPI) in the UK hit a fresh five-year high in November, further putting pressure on the British cost of living, official data showed on Tuesday.

In a report, the UK Office for National Statistics (ONS) said the rate of consumer price inflation rose from the year before by a seasonally adjusted 3.1% last month. That was the highest level since March 2012 and settled above forecasts for the reading to match the 3.0% increase seen in October.

The ONS indicated that rising air fares were the biggest factor behind the increase in headline, along with recreational and cultural goods and services such as computer games.

“Falling prices in the miscellaneous goods and services category (covering products such as travel goods and financial services) provided the largest offsetting downward contribution,” it added.

The increase means the Bank of England governor Mark Carney will have to write a letter to chancellor Philip Hammond explaining why inflation is racing over the BoE’s 2% target. Of note, annual inflation is putting pressure on British households as wage inflation remains at a lower 2.1%.

Month-over-month, consumer price inflation rose 0.3% in November, compared to consensus expectations for a 0.2% advance and the 0.1% gain registered in the previous month.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 2.7% last month, matching, as expected, October’s increase.

The retail price index (RPI) increased by 3.9% on an annualized basis in November, compared to previous month’s 4.0% rise. Analysts had expected inflation to increase to 4.1%.

Month-on-month, RPI increased by just 0.2% in November, slightly higher than the 0.1% rise seen a month earlier but below the forecast for a 0.3% gain.

The data also showed that the house price index rose 4.5% in November, below forecasts for a gain of 5.2% and following a 4.8% increase a month earlier. October’s data was revised down from an initial 5.4% rise.

Following the report, GBP/USD traded at 1.3370 from around 1.3362 ahead of the release of the data, EUR/GBP was at 0.8811 from 0.8816 earlier while GBP/JPY changed hands at 151.64, compared to 151.53 previously.

Meanwhile, European stock markets traded mostly higher. London’s FTSE 100 gained 0.11%, the Euro Stoxx 50 rose 0.25%, France's CAC 40 traded up 0.27%, while Germany's DAX advanced 0.12%.

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