According to offical data, UK consumer prices inflation remained unchanged at 2.7% in November. The fastest price rises were seen in the cost of fruit, bread and cereals, as well as in energy bills, the Office for National Statistics (ONS) said. Retail prices index (RPI) inflation, which includes housing costs, fell to 3% last month, from 3.2% in October. The consumer prices index (CPI) rate, which is targeted by the Bank of England, had jumped from a three-year low of 2.2% to 2.7% in October, a much bigger rise than had been expected and which came as a nasty shock in the City.
CPI inflation is now expected by many investors and economists to creep up further next year as further increases in electricity and gas prices take effect.
“UK inflation paused for breath in November before it resumes its assault on the 3% mark over the next few months,” said Rob Wood, economist at Berenberg Bank. The Bank has tolerated the elevated inflation rate because of the depressed state of the economy, which has led the Bank to consistently overestimate how quickly CPI would fall back to its target. The Bank now expects inflation to fall back to its target only in the autumn of 2014.Credit: BBC/Reuters/APD