U.K. CPI Rises to the Highest in Six Months on Rising Fuel Costs

U.K. inflation leapt at an annualized rate of 1.9% in November from 1.5% the previous month amid economists’ expectations of 1.8% on the back of rising fuel and transportation costs, marking the fastest pace of growth in six months. Meanwhile, consumer prices climbed 0.3% for the month from 0.2% in October, with the core rate of inflation pushing1.9% higher from 1.5% the month prior. Furthermore, the retail price index added 0.3% for the month and year, while annual retail prices less mortgage interest payments gained 2.7%. The breakdown of the inflation report showed an annualized 6.9% gain in transportation and was followed by education rising 5.2%, while clothing & footwear plunged 6.3% to taper the advance.



As the Bank of England keeps its 200 billion pound ($326 billion) asset purchase plan and holds the benchmark interest rates unchanged at 0.50% to stem the downside risks for growth and inflation, the central bank is widely expected to maintain its current policy at its next meeting on January 7th in order to encourage a sustainable recovery. Nevertheless, Chancellor of the Exchequer Alistair Darling forecasts price pressures to rise to an annualized rate of 3% during the first half of the following year before weakening towards the end of 2010, and the rebound in inflation may lead the BoE to hold a hawkish outlook for future policy as the central bank sees the economy emerging from the worst recession since the post-war period.