United Kingdom: Inflation continues to moderate in November
December 13, 2011
In November, consumer prices rose 0.2% over the previous month, slightly above the 0.1% increase recorded in October. Most of the upward pressure came from rising prices in the food, clothing and household goods categories. Annual headline inflation fell from 5.0% in October to 4.8% in November, which was in line with market expectations. Inflation in the U.K. remains relatively high by historical standards and is well above the Bank of England's target of 2.0%. According to the Bank of England, however, the elevated inflation rate mainly stems from higher global commodity prices and January's VAT rate hike, and should gradually dissipate in 2012. According to its November Inflation Report, the Bank of England estimates inflation to average 4.5% in 2011 before moderating to 2.6% in 2012.