Inflation rate close to six year high

The Office for National Statistics (ONS) has announced that the rate of inflation hit a six year high in November at 3.1%.

UK consumers are likely to feel the impact over the Christmas period, as food prices increased 4.1% compared to last year, whilst clothing and footwear also jumped by 3%.

Analysts had predicted that we'd seen the peak for inflation, driven predominantly by the exchange rate changes post Brexit. However, the ONS also revealed that producer prices, measuring the cost of fuel and raw materials had increased 7.3% year on year, a significant increase on the 4.3% seen in October. Factory gate prices also rose three per cent year-on-year.

With inflation being above the government target, Mark Carney, Governor of the Bank of England will now have to write to Chancellor Philip Hammond to explain why the bank has failed to keep rising prices within government targets.

Mike Prestwood Head of Inflation at the ONS said “CPI inflation edged above three per cent for the first time in nearly six years, with the price of computer games rising and airfares falling more slowly than this time last year. These upward pressures were partly offset by falling costs of computer equipment. The prices of raw materials and goods leaving factories continued to increase as oil and petrol prices continued to rise.

“Annual rises in house prices and rents continued to slow, with London seeing house price falls for the second month running.”

Source: Insight DIY Team & ONS Press Release.

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