United Kingdom: Inflation breaks through the 3.0% barrier in November
December 12, 2017
Consumer prices rose 0.3% in November over the previous month, up from October’s 0.1% uptick and slightly overshooting analysts’ expectations of a 0.2% increase. November’s figure was largely driven by higher prices for food and non-alcoholic beverages, clothing and footwear, and recreation and culture.
Inflation in November ticked up to 3.1% from October’s 3.0%, overshooting analysts’ expectations. This was largely a result of a slower fall in airfare prices compared to the same month last year. November’s result marks the first time inflation has pierced the 3.0% barrier since March 2012, and means Bank of England Governor Mark Carney will be obliged to write a letter to the chancellor explaining the deviation from the 2.0% target. Annual average inflation increased from 2.4% in October to 2.6% in November.
UK Inflation Forecast
The Bank of England sees inflation reaching 2.4% in Q4 2018 and 2.2% in Q4 2019. FocusEconomics Consensus Forecast panelists expected inflation to average 2.5% in 2018 and 2.2% in 2019, as the impact of the depreciation of the currency gradually ebbs.
Author: Oliver Reynolds, Economist