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UK inflation remains at 2.7%, highest since May
Source: Agencies |
December 19, 2012, Wednesday
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UK inflation in November remained at its highest level since May, confounding forecasts it would ease and potentially giving the Bank of England less room to resume quantitative easing to support the struggling economy.
The data released yesterday, showing annual consumer price inflation held at 2.7 percent after a surprise jump in October, will reinforce Bank of England concerns that price pressures may prove persistent and restrain consumer spending.
Economists had forecast a dip in inflation to 2.6 percent in November.
High inflation, which peaked at 5.2 percent last year, has weighed on consumer spending, holding back the economy's recovery from its second recession in four years.
A fall in gasoline prices was not enough to outweigh price rises for household bills for electricity and gas, as well as food, the data from the Office for National Statistics showed.
"I was a little surprised on CPI because I was expecting utility prices to have less of an impact. There are still quite a lot of utility price increases in the pipeline," said Jens Larsen, economist at RBC Capital Markets.
In addition, annual services price inflation accelerated to 4.2 percent, its highest since December 2011.
In its quarterly forecasts released last month, the Bank of England said British inflation was likely to be significantly higher over the next 18 months than expected in August.
The central bank's projections showed it would take until the third quarter of 2014 before inflation fell below its 2 percent target, nine months later than predicted in August, despite sluggish economic growth.
Stubbornly high inflation deterred some policymakers from approving another cash boost for the economy in November, and earlier this month the BoE again voted against more government bond purchases.
The data released yesterday, showing annual consumer price inflation held at 2.7 percent after a surprise jump in October, will reinforce Bank of England concerns that price pressures may prove persistent and restrain consumer spending.
Economists had forecast a dip in inflation to 2.6 percent in November.
High inflation, which peaked at 5.2 percent last year, has weighed on consumer spending, holding back the economy's recovery from its second recession in four years.
A fall in gasoline prices was not enough to outweigh price rises for household bills for electricity and gas, as well as food, the data from the Office for National Statistics showed.
"I was a little surprised on CPI because I was expecting utility prices to have less of an impact. There are still quite a lot of utility price increases in the pipeline," said Jens Larsen, economist at RBC Capital Markets.
In addition, annual services price inflation accelerated to 4.2 percent, its highest since December 2011.
In its quarterly forecasts released last month, the Bank of England said British inflation was likely to be significantly higher over the next 18 months than expected in August.
The central bank's projections showed it would take until the third quarter of 2014 before inflation fell below its 2 percent target, nine months later than predicted in August, despite sluggish economic growth.
Stubbornly high inflation deterred some policymakers from approving another cash boost for the economy in November, and earlier this month the BoE again voted against more government bond purchases.
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