LONDON — UK inflation came in slightly below expectations at 10.7% in November.
Economists polled by Reuters had forecast a full-year rise of 10.9% for the consumer price index in November, after an unexpected rise of 11.1% in October, a 41-year high. On a month-by-month basis, he increased by 0.4% in November, down from his 2% increase in October, and below the consensus forecast for him by 0.6%.
Related investment news
According to the National Bureau of Statistics, the biggest increase comes from “housing and domestic services (mainly from electricity, gas and other fuels), and food and non-alcoholic beverages.”
The biggest decliners this month were “transportation, especially motor fuels, with the biggest gains partially offset by higher prices in restaurants, cafes and pubs.”
The Bank of England is due to announce its next monetary policy move on Thursday. Interest rates are widely expected to rise by 50 basis points as policymakers say the economy is already in its longest recession on record with very high inflation.
The country faces widespread industrial action over the Christmas period as workers strike, demanding higher wages and better working conditions as inflation approaches.
The independent Office for Budget Responsibility predicts that the UK’s standard of living will suffer the biggest decline since records began, as real household incomes are projected to fall by 4.3% between 2022 and 2023. .
UK Finance Minister Jeremy Hunt last month unveiled a massive £55bn ($68bn) fiscal plan that includes massive tax increases and spending cuts to close a real hole in the country’s finances.
A positive step, but risks remain
Wednesday’s fall in figures was a step in the right direction, but persistent problems of rising food prices and household utility bills remain a thorn in the UK economy, said Quilter Cheviot’s head of fixed rate research. Richard Carter pointed out.
But Carter suggested that inflation may have finally peaked after the US released a better-than-expected consumer price index on Tuesday.
“The temperature has dropped sharply in the last week or so,” Carter added. “With people being forced to heat their homes, the demand for gas will definitely increase.”
“It was a fairly mild autumn, so it is only now that we start to see the real impact of the energy rate hike. Changes can have ripple effects: on inflation.”
The Bank of England faces the difficult task of bringing inflation back to its 2% target while recognizing a weakening economy. This was evident in the latest UK labor market data released earlier this week, which shows both unemployment and wage growth are rising.
“Inflation has fallen, but it still far exceeds wages, resulting in a concentration of strikes in the unionized public sector and formerly nationalized industries, and new discontent,” Carter said. We are heading into winter,” he said.
The market has priced in a 50 basis point rate hike from banks on Thursday, raising the benchmark rate to 3.5%. Policymakers have suggested that the pace of rate hikes may slow in 2023. However, inflation is still well above target.
“The prime minister’s fall statement in November helped calm things down after months of great turmoil, but inflation remains well above the bank’s 2% target,” Carter said. It means that there is still a long way to go.
“Inflation is very unlikely to fall sharply, but it’s positive that it’s finally going in the right direction,” he said.
This is breaking news. Please check back later for more details.
