The UK economy has experienced its highest inflation rate in eight months, reaching 2.6% in November due to rising fuel and clothing prices.
UK Inflation Hits Highest Level in Eight Months
The UK inflation rate has risen for the second consecutive month, reaching its fastest pace since March.
According to official figures, inflation hit 2.6% in November.
Fuel and clothing prices were among the main drivers behind the increase, with ticket prices for gigs and plays also rising.
Analysts say the latest figures make it unlikely that the Bank of England will cut interest rates when it meets on Thursday.
Inflation Explained
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: “Inflation rose again this month as prices of motor fuel and clothing increased this year but fell a year ago.”
“This was partially offset by air fares, which traditionally dip at this time of year, but saw their largest drop in November since records began at the start of the century.”
Chancellor Rachel Reeves acknowledged that families are still struggling with the cost of living.
Businesses Feeling Pressure
David Miller, owner of a fish and chip shop in Yorkshire, said: “It’s been a tough year. We’ve taken a hit with our bottom line because of fuel, obviously the utilities going up.”
“But I think the biggest thing overall for any business is wages,” he added.
Miller’s employs 60 people and tries to pay above the minimum wage.
Interest Rate Decision
The Bank of England will have to weigh up competing arguments over whether to cut interest rates when it meets on Thursday.
Recent figures show that the economy shrank in September and October, but rising prices suggest that rates may need to remain at their current 4.75% for longer.
Many economists now expect interest rates to fall more slowly next year than previously expected.
Paul Dales, chief UK economist at Capital Economics, said: “There is almost no chance of the Bank of England delivering an early Christmas present with another interest rate cut tomorrow.”
“That’s especially the case since domestic inflation pressures appear to be a touch stronger than the Bank expected,” he added.
