UK inflation hits decade high ahead of central bank meeting

London (image: Reuters)
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LONDON (AP) — Consumer prices in the U.K. are rising at their highest rate in over a decade as a result of soaring energy costs and blockages in the supply chain, official figures showed Wednesday, a day before the Bank of England is set to next decide on interest rates.

The Office for National Statistics found that inflation rose by 5.1% in the year to November, up dramatically from October’s 4.2%. The increase was more than the 4.8% consensus of economists’ forecasts and takes the level of inflation up to its highest level since September 2011.

The increase is likely to pile on the pressure on rate-setters to raise interest rates on Thursday as inflation is running at more than double the central bank’s target of 2%. However, most economists think they will opt against raising the benchmark rate from the current record low of 0.1% because of the huge uncertainty surrounding the spread of the omicron variant of the coronavirus.

With infections widely anticipated to hit levels not seen before during the coronavirus pandemic and new restrictions imposed, there are worries over the already muted economic recovery in the U.K.

An interest rate increase which would increase many loans and mortgages, however, modest, is the last thing households will want before Christmas. Wednesday’s figures showed how widespread the rise in inflation is, with surging prices found across a raft of goods and services, including for fuel, energy, cars, clothing and food,