- UK inflation rose 5.1% in the year to November, the biggest jump since September 2011, official figures showed.
- The Wednesday figures pile pressure on the Bank of England to tamp down price rises by raising interest rates.
- The UK is one of many advanced economies grappling with strong inflation after the pandemic shock of 2020.
Consumer prices across the UK economy rose 5.1% in the year to November, according to official figures out Wednesday, which is the fastest rate of inflation in a decade.
The jump in inflation piles pressure on the Bank of England to raise interest rates to stamp down on the rapid price rises. That said, the UK central bank’s calculations have been complicated by the spread of the Omicron coronavirus variant.
November’s 5.1% figure was well above economists’ expectations of a 4.8% increase in the consumer price index, and was significantly higher than October’s 4.2% figure. It was the strongest reading since September 2011.
Price rises were broad-based, the Office for National Statistics said. Fuel was an especially big driver, with average prices at gas stations rising to levels not seen before.
The BoE expected inflation to come in at around 4.5% in November. It chose not to raise interest rates at its last meeting, and markets will watch for any change when it announces its latest decision Thursday.
On Tuesday, the International Monetary Fund warned the BoE was at risk of letting inflation get out of control and urged it to “withdraw the exceptional support provided during 2020.” Inflation in November was far higher than the bank’s 2% target.
However, the spread of the highly mutated Omicron coronavirus variant has recently caused economists to dial back their expectations that the BoE on Thursday would raise its main interest rate from its current record low of 0.1%.
The November inflation reading “gives the Bank enough ammunition to raise interest rates tomorrow, but we still think it is more likely to keep its powder dry until it knows more about the Omicron situation,” said Paul Dales, chief UK economist at the consultancy Capital Economics.
The UK is one of many advanced economies hit by sharply rising prices as consumer demand recovers from 2020’s coronavirus shock, but supply struggles to keep up.
In the US, the Federal Reserve is due to announce its latest monetary policy decision Wednesday, after inflation soared to 6.8% in November, an almost 40-year high.
The European Central Bank is set to announce its decision Thursday. Eurozone inflation hit 4.9% in November, according to an early estimate, the highest level since the single-currency bloc was founded in the late 1990s.