United Kingdom consumer inflation hits 3.1pc ahead of Bank of England meeting


United Kingdom inflation accelerated unexpectedly to its highest level in more than five years in November, on airfares and computer games, official data showed Tuesday.

"If inflation does persist, or even accelerate, that would be a huge surprise to investors and not necessarily a nice one", he says. "Some of the biggest contributors to the inflation rate were food and recreational goods such as computer games".

Paul Hollingsworth at Capital Economics said while the 3.1% CPI outturn was a little higher than the forecast from the BoE's Monetary Policy Committee of 3%, October's figure was being 0.2 percentage points below its forecast, so "this is unlikely to worry the Committee".

The consumer price index net of food and energy prices rose 0.9 percent year-on-year following 0.8 percent in October.

Mark Carney, the governor of the Bank of England, will now have to write a letter to Chancellor Philip Hammond explaining how the Bank intends to bring inflation back to its 2% target. Carney's letter, which will be published in February, will be his first since October 2016 when inflation was a below-target 0.9%.

"Too much inflation could threaten the Bank's credibility and therefore its grip on the economy", she says. Price growth was last higher in March 2012.

However, he expects the inflation rate to now fall and could reach 2.5% by Easter.

In addition, food and non-alcoholic drink prices have increased by 4.2% since November past year - the highest rate recorded since 2013. The cumulative growth for the period April-October over the corresponding period of the previous year stood at 2.5 percent.

The Bank of England is not expected to raise rates again at its meeting this week despite the rise in inflation.

On a month-on-month basis, the core CPI edged up 0.1 percent in November after rising 0.3 percent in October.

Another report from the ONS showed that output price inflation climbed to 3% in November from 2.8% in October.

Consumer durable goods output contracted by 6.9 percent in October as against a growth of 1.5 percent in the previous year.