UK inflation takes a breather in November; drops to 10.7% per year

UK inflation eased more than expected in November after reaching its highest level in 41 years in October, raising hopes that price rises have peaked as well as providing some reassurance for the Bank of England (BoE). its acronym in English), which is preparing to raise interest rates again today.

The Consumer Price Index (CPI) decreased to 10.7% in November from 11.1% registered in October, reported the National Statistics Office (ONS), which represented a larger drop than expected by economists in a Reuters poll. of 10.9 percent.

The core CPI – which excludes energy, food, alcohol and tobacco prices, and which some economists look to for longer-term price trends – fell to 6.3% over 12 months in November from 6.5%. October.

“Prices are still rising, but less than last year, the most notable example being fuel,” said Grant Fitzner, ONS chief economist.

Like other central banks, the BoE is battling inflation well above its 2% target and has raised interest rates sharply over the past 12 months, including to 75 basis points in November, the highest in more than 30 years.

Most economists expect the central bank to raise yields again to 3.5% from the current 3%, despite their forecasts that the economy is headed for a long recession.

Inflation in the United Kingdom is higher than that of the United States (7.1%) and the euro zone (10 percent).

The Bank of England has been left in a difficult situation and its policy makers are increasingly divided on the appropriate response.

Unfortunately for the UK the economy is hit by US-style wage pressures and a European-style energy crisis all at the same time,” said Hugh Gimber, global markets strategist at JP Morgan.

Paul Dales, chief UK economist at Capital Economics, said the latest data makes it less likely that rates will peak as high as the previous forecast of 4.5 percent.

Today’s decision is likely to see another split vote among BoE officials, who disagree to what extent a recession will cool price pressures.