- CPI rose to 2.6% in November – the second rise in a row and the highest since March 2024
- Core inflation went up to 3.5% and service inflation remained steadfastly sticky at 5%
- Petrol prices and clothing costs both up and goods inflation back in positive territory
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK inflation figures:
“Households really won’t care that at 2.6% inflation is significantly lower than that the levels we all experienced at the height of the cost-of-living crisis, all they’ll really care about is that prices are still rising faster than any of us would like.
“It means less money in our pockets and even with average wage growth still nicely overshooting that figure, cumulatively we’re all still reeling from the impact the last couple of years has had on our finances.
“Whilst prices do naturally rise and fall, meaning the increases in fuel and clothing costs aren’t really cause for specific concern, it’s the stickiness of service sector inflation that will be drawing the attention of Bank of England rate setters who are about to make their last decision of 2024.
“Even before today’s CPI data and yesterday’s wage data markets had already priced out a December cut which had seemed almost inevitable back in the early autumn. What’s changed is where markets expect rates will go in 2025.
“A few weeks ago, Andrew Bailey suggested that four cuts looked likely over the next 12 months, taking the base rate from 4.75% to 3.75%. Looking today more than a third believe it will take until the August meeting for the MPC to pull out two quarter percentage point cuts.
“Higher for longer borrowing costs are just another potential pitfall businesses are having to factor into their planning, and higher for longer rates aren’t exactly the best medicine for supercharged economic growth.”
