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Big rise in UK inflation

The CPI annual inflation rate rose to 1.9% in November following a rise of 1.5% in October. This increase was faster than expected and was mainly due to changes in transport prices, with the largest effect coming from fuels and lubricants. In this category, prices rose by 2.8% between October and November this year but fell by a huge 8.3% twelve months earlier.

 

According to the ONS there were small upward pressures from clothing and footwear and household and household services, whilst the largest downward pressure came from food and non-alcoholic drinks.

 

This increase in CPI was the biggest increase since May 2009 and CPI is expected to rise above its 2% target rate in the New Year when VAT is returned to its 17.5% rate from the temporary 15% rate operating at the moment.

 

The latest trends can be seen in the figure below.

Source: ONS

Source: ONS

 

Also, in the year to November, RPI inflation was 0.3% compared with a rate of -0.8% in October. According to the ONS such a rise of 1.1% has not been seen since April 1990 when the monthly increase was from 8.1% to 9.4%. Apart from the factors which influenced changes in the CPI there was also upward pressure from housing, mainly from mortgage interest payments which rose this year after falling a year ago.

 

The RPIX inflation rate, which excludes mortgage interest payments, was 2.7% in November, up from 1.9% in October.

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Posted in Consumer Price Index, Inflation

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