UK inflation eases, remains close to 40-year high
Food price inflation accelerated for a 16th straight month in November
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U.K. inflation remained close to a 40-year high in November, piling pressure on employers to boost wages as the nation faces a wave of strikes and economists expect the Bank of England to approve a ninth consecutive interest rate increase on Thursday.
While annual consumer price inflation dipped to 10.7% in November from 11.1% the previous month, inflation remains at levels last seen in the 1970s and early 1980s, the Office for National Statistics said Wednesday.
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The figures offer little relief for consumers as the high cost of food and energy erodes spending power. Food price inflation accelerated for a 16th straight month in November, with prices rising 16.5% from a year earlier, the ONS said.
A man walks in front of the Bank of England, at the financial district in London, on Nov. 3, 2022. Britain’s economy shrank in the three months through October, confirming the toll that rampant inflation and rising interest rates are having on busine (AP Photo/Kin Cheung / AP Images)
The inflation report came on a day when people across Britain struggled to get to work and mail wasn’t delivered due to strikes by rail and postal workers demanding higher pay. Nurses in England, Wales and Northern Ireland are set to hold the first of two one-day strikes on Thursday, with ambulance crews and border officials scheduled to strike later this month.
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Inflation remains stubbornly high across Europe, which has been hard hit by a jump in the price of natural gas — used to generate electricity, heat homes and fuel industry — following Russia’s invasion of Ukraine. That contrasts with the U.S., where the inflation rate dropped to 7.1% in November from a peak of 9.1% in June.
British officials said it was too soon to say whether inflation had peaked in the U.K.
People walk on Regent Street, in London, on Nov. 17, 2022. Britain’s economy shrank in the three months through October, confirming the toll that rampant inflation and rising interest rates are having on business and industry. (AP Photo/Kin Cheung / AP Images)
"Some may be calling this a peak; it is, I think, too early," Grant Fitzner, chief economist for the ONS told the BBC. "We’ve only seen one fall from a 40-year high, so let’s wait a few months."
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The figures will be watched closely by Bank of England policymakers, who are meeting ahead of an interest rate decision on Thursday.
According to data from the Bank of England, pictured here in London, on Oct, 22, 2021, the UK's economy output has seen its sharpest drop since 1709. (REUTERS/Hannah McKay / Reuters Photos)
Economists expect the bank to raise its key rate by half a percentage point to 3.5% this week. That would be the ninth consecutive rate increase since December of last year, when the rate stood at 0.1%
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The central bank last month forecast that inflation would peak at around 11% this year before beginning to slow early next year. The bank expects inflation to drop below its 2% target within two years.
But the bank also cautioned that those projections were uncertain, primarily due to volatility in energy prices.