Inflation hits close to a six-year high at 3.1% in November

Inflation unexpectedly jumped to a near six-year high last month, forcing the Bank of England to explain to the Chancellor how it will tackle Britain's surging inflation.

By The Newsroom
Tuesday, 12th December 2017, 5:54 pm
Updated Tuesday, 12th December 2017, 5:55 pm
The rise puts pressure on families and individuals as wages stagnate
The rise puts pressure on families and individuals as wages stagnate

Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) rose to 3.1% in November, up from 3% in October.

It means inflation has climbed to its highest level since March 2012, with economists expecting CPI to hold steady for the third month in a row at 3%.

That said Danske Bank economist Conor Lambe was more bad news for the province.

“Looking forward, inflation is not expected to rise too much higher than its current rate,” he said.

“But, with the rate of price growth still above the rate of wage growth, the consumer squeeze is likely to continue holding back economic growth in Northern Ireland and the rest of the UK as we move into the new year.”

The rise also spells more misery for households as they face a further squeeze on their finances ahead of the Christmas period.

Jordan Buchanan, economist at the Ulster University Economic Policy Centre said the future outlook was little brighter.

“The Ulster University Economic Policy Centre forecast is that UK consumer price inflation is likely to continue to outpace wage growth for the rest of this decade”.

The latest increase also means Bank Governor Mark Carney must write a letter to Chancellor Philip Hammond - due to be published in February - outlining the reason behind CPI’s rapid rise.

The Government has set a CPI target of 2%, with protocol dictating that the Bank must contact Mr Hammond if inflation exceeds 3% or falls short of 1%.

The move will pose fresh questions to the Bank’s interest rate-setting Monetary Policy Committee (MPC) about whether or not inflation has topped out.

The MPC is expected to keep interest rates on hold when it announces its latest decision on Thursday, after hiking the cost of borrowing to 0.5% last month.

The lion’s share of the rise came from air fares, which recorded a smaller monthly drop in November at 10.4%, compared with a 13.4% fall over last year.

Computer games prices were also boosting everyday costs, as games, toys and hobbies lifted 3.7% on an annual basis last month.