UK inflation climbed to 2.6% in November, fresh data from the Office for National Statistics (ONS) revealed, exceeding both the Bank of England’s forecast of 2.4% and the 2.3% recorded in October.
The surprise jump marks the second consecutive monthly increase, pushing the headline figure even further above the central bank’s 2% target.
The acceleration in price growth has reinforced expectations that the Bank of England’s monetary policy committee will vote decisively to hold interest rates at 4.75% on Thursday, likely opting for an 8-1 majority in favour of no change. Policymakers have recently emphasised caution as they weigh persistent inflationary pressures against a backdrop of sluggish economic growth.
Services inflation, closely monitored by the Bank as a gauge of underlying price trends, remained stable at 5%. Meanwhile, core inflation—which strips out volatile food and energy costs—rose from 3.3% to 3.5%. In addition, wage growth reached 5.2%, further complicating the inflation outlook and stoking concerns that underlying cost pressures may become entrenched.
The ONS attributed last month’s overall increase largely to rising petrol costs. That upward pressure, however, was partially offset by a record drop in air fares. Still, the latest figures pose a challenge for Chancellor Rachel Reeves, who this month has faced a series of discouraging economic indicators. The ONS recently reported a 0.1% contraction in October’s GDP, and private sector hiring has slumped at a pace unmatched since the financial crisis, excluding the pandemic.
Economists have warned that the Chancellor’s Budget, unveiled on October 30, could fan near-term inflation due to higher government spending and substantial tax hikes on employers. Businesses, facing a £25bn increase in National Insurance contributions, have hinted they may pass on these additional costs to consumers. As a result, cautious optimism that the Bank of England might start cutting rates early next year has given way to expectations of a more gradual easing—with analysts predicting just four quarter-point reductions across the whole of 2025.
Chancellor Reeves acknowledged ongoing strains, saying: “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.” She defended recent measures to support household income, including a freeze on fuel duty and a boost to the National Living Wage, while noting that more needed to be done to ensure rising pay packets keep ahead of inflation.
Grant Fitzner, chief economist at the ONS, remarked on the month’s results: “Inflation rose again this month as prices of motor fuel and clothing increased this year but fell a year ago. This was partially offset by air fares, which saw their largest drop in November since records began.”
As policymakers and businesses brace for another interest rate decision, the latest inflation data underline the delicate balance the UK faces between fostering economic stability and keeping a lid on rising prices.
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UK inflation rises to 2.6% as interest rate decision looms
