Poland Core Inflation Accelerates In November

Poland Core Inflation Accelerates In November

United Kingdom inflation accelerated to a more than five year high in November, data from the Office for National Statistics showed Tuesday.

The Consumer Price Index measure of inflation (CPI) climbed to its highest level since March 2012, meaning the cost of living continues to increase well ahead of wage growth.

Icra's Principal Economist Aditi Nayar said the uptick in the CPI inflation was significantly sharper than expected, validating the caution displayed by the Monetary Policy Committee of the RBI in its recent reviews.

The rate of retail food inflation during November stood at 4.42 per cent on a year-on-year basis, against 1.90 per cent the previous month, amidst soaring food prices amid unseasonably heavy rains.

The latest reading means Mr Carney is now compelled to write to Chancellor of the Exchequer Philip Hammond explaining why inflation is more than 1 per centage point away from the official 2 per cent target.


However, he expects the inflation rate to now fall and could reach 2.5% by Easter. It also said prices of recreational and cultural goods and services, most notably computer games, also had an upward effect.

Inflation rose to 3.1% in November, the highest in almost six years, as the squeeze on households continued. That's something that the Bank of England has indicated, too, in its quarterly economic projections.

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. "However, with the inflation rate being pushed up predominantly by the twin forces of higher oil prices and the weak exchange rate, the likelihood is that the rate will soon start to cool again as these pressures abate". Few, if any, experts think it will raise interest rates then.

Aberdeen Standard Investments chief economist Lucy O'Carroll says the Bank of England has a "tricky tightrope to walk".

Meanwhile, core inflation, which excludes volatile items such as energy prices, was unchanged at the 2.7% rate recorded in the previous two months, which was the highest on record since 2011. Too much inflation could threaten the Bank's credibility and therefore its grip on the economy.

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