UK Inflation Rate Increases Ahead of Bank of England Interest Rate Meeting

The UK’s inflation rate increased to 2.6% in November ahead of the anticipated Bank of England interest rate meeting scheduled for later this week.

The United Kingdom’s year-on-year inflation rate climbed to 2.6% in November, up from 2.3% in October, according to the Office for National Statistics. Core inflation also rose slightly, reaching 3.5% in November compared to 3.3% in October, though it fell just below the forecasted 3.6%.

Earlier Fall in Inflation Rate

Earlier this year, a decline in inflation allowed the Bank of England’s Monetary Policy Committee (MPC) to lower interest rates in both August and November.

In September, headline inflation briefly dropped to 1.7%, only to rise again due to increasing energy costs. While services inflation has remained steady at 5% this month, meeting expectations, it reflects ongoing price pressures in the sector.

Despite the rise in inflation rate to 2.6%, the Bank of England is still expected to keep interest rates on hold at 4,75% at its meeting later this week to address inflationary pressures. Analysts remain divided on whether the MPC will opt for a rate cut in February 2025.

Current Economic Situation

Speaking on the country’s current economic situation, Chancellor of the Exchequer, Rachel Reeves said: “I know families are still struggling with the cost of living and today’s figures are a reminder that for too long the economy has not worked for working people.

“I am fighting to put more money in the pockets of working people. That’s why at the Budget we protected their pay slips with no rise in their national insurance, income tax, or VAT, boosted the national living wage by £1,400, and froze fuel duty.