The UK inflation rate has risen to 2.6% in the year to November. This is the second consecutive increase, rising from 2.3% in the year to October, and an 8-month high.
Why has the UK inflation rate increased again?
The main contributing factors for the increase were the rise in fuel and clothing costs as well as tobacco duty. The cost of petrol increased by 0.8p/litre from October to November and the cost of diesel increased by 1.4p/litre. Increased prices for theatre and concert tickets have also factored in this inflation rate rise.
Airfares partially offset this increase with ‘their largest drop in November since records began’, according to the chief economist at the Office for National Statistics (ONS). They fell by 19.3% compared with a decrease of 13.9% a year ago.
Core inflation, which excludes food, energy, tobacco and alcohol, rose to 3.5% in November from 3.3% the previous month. Services inflation remained at 5%, which was lower than the anticipated 5.1%.
What does this inflation rate increase mean for interest rates?
This inflation rate increase wasn’t unexpected as economists had forecast a further increase following the Autumn Budget. Higher prices combined with an annual wage growth increase to 5.2% in October mean that high inflation is persisting. As such, the Bank of England needs to remain cautious with the steps taken to tackle it. Therefore, a day ahead of the next Monetary Policy Committee’s (MPC) review, it is anticipated that the base rate will be kept at its current level of 4.75% as a measure to keep inflation under control.
Discuss your mortgage concerns with our brokers
As inflation has increased again above the Bank of England’s 2% target rate and mortgage rates have already increased following the Autumn Budget, you may be understandably worried about what this means for your mortgage.
We’re here to help with your mortgage concerns so reach out to us on 01322 907 000. Our mortgage brokers are ready to discuss your current deal and situation before searching for alternative options that may be better suited to your needs. With access to exclusive deals and providing impartial advice, our brokers will strive to find the best mortgage solution for you, enabling you to make an informed decision before proceeding.