UK inflation eases but little relief at near 40-year high
Dec 14, 2022, 1:24 AM | Updated: 5:11 pm
(AP Photo/Kin Cheung, File)
LONDON (AP) — U.K. inflation has eased but is still stuck near a 40-year high, piling pressure on employers to boost wages as the nation faces a wave of strikes and the Bank of England to approve a ninth consecutive interest rate increase.
While annual consumer price inflation dipped to 10.7% in November from 11.1% the previous month, it is at levels last seen in the 1970s and early 1980s, the Office for National Statistics said Wednesday.
The figures offer little relief for consumers as the high cost of food and energy erodes spending power. Food prices accelerated for a 16th straight month in November, rising 16.5% from a year earlier, the ONS said.
The inflation report came on a day when people across Britain struggled to get to work and mail wasn’t delivered due to strikes by rail and postal workers demanding higher pay. Nurses in England, Wales and Northern Ireland are set to hold the first of two one-day strikes Thursday, with ambulance crews and border officials scheduled to strike later this month.
Inflation is stubbornly high across Europe, which has been hard hit by a jump in the price of natural gas — used to generate electricity, heat homes and fuel industry — following Russia’s invasion of Ukraine. While inflation slowed in the 19 countries that use the euro last month, it was still a painful 10%.
That contrasts with the U.S., where the inflation rate dropped to 7.1% in November from a recent peak of 9.1% in June.
British officials said it was too soon to say whether inflation had peaked in the U.K., where the economy has contracted.
“Some may be calling this a peak; it is, I think, too early,” Grant Fitzner, chief economist for the ONS told the BBC. “We’ve only seen one fall from a 40-year high, so let’s wait a few months.”
The figures will be watched closely by Bank of England policymakers, who are meeting Thursday.
Economists expect the bank to raise its key interest rate by half a percentage point, to 3.5%. That would be the ninth consecutive rate increase since December of last year, when the rate stood at 0.1%.
The central bank last month forecast that inflation would peak at around 11% this year before beginning to slow early next year. The bank expects inflation to drop below its 2% target within two years.
But the bank also cautioned that those projections were uncertain, primarily due to volatility in energy prices.
Helen Dickinson, chief executive of the British Retail Consortium, said there is little sign inflation will ease significantly soon.
“It will undoubtedly be a challenging Christmas period for many households across the UK. Not only are the costs of food and gifts up on last year, but (energy) bills are up 27% too,” she said in a statement.
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