November inflation up at 4.88%, factory output growth dips

Retail inflation hit a 15-month high of 4.88 per cent in November due to costlier fuel, vegetables and eggs, as per data released by the Central Statistics Office (CSO) today.

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

He points out that school fees have risen 553 per cent over the last 25 years compared to 201 per cent for consumer prices and 217 per cent for wages. "Some of the biggest contributors to the inflation rate were food and recreational goods such as computer games".

As the current rate of inflation is more than 1% away from the Bank of England's 2% inflation target, governor Mark Carney will be required to write a letter to Chancellor Philip Hammond to explain how he intends to bring inflation back under control.

According to ONS head of inflation Mike Prestwood, "CPI inflation edged above 3 per cent for the first time in almost six years with the price of computer games rising and air fares falling more slowly than this time last year".

The BoE is widely expected to keep rates unchanged at 0.5 percent on Thursday.

Inflation's sharp rise over the past year or so is directly related to Britain's vote in June 2016 to leave the European Union.

It said then that inflation was near its peak and would then fall slowly over the next three years to just above 2 percent. But some of the latest surveys suggest that service sector costs and prices are rising.

For RPI, one additional uncertainty is the extent to which the November Bank Rate hike will push up on inflation as a result of higher mortgage interest payments.

Aberdeen Standard Investments chief economist Lucy O'Carroll says the Bank of England has a "tricky tightrope to walk". The report further added that inflation will remain above the 4-per-cent mark in 2018, making rate cuts improbable. The cumulative growth for the period April-October over the corresponding period of the previous year stood at 2.5 percent.

"That'll be of small comfort, however, to households facing a significant increase in the cost of Christmas this year".

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