British inflation rocketed to its highest level in more than 10 years on broad price gains, data showed yesterday on the eve of a Bank of England decision on interest rates.
The annual rate last month surged to 5.1 percent after October’s 4.2 percent, the British Office for National Statistics (ONS) said in a statement.
Last month marked the highest level since September 2011, with inflationary pressures driven partly by soaring fuel costs.
Photo: Bloomberg
The Bank of England, whose main task is to keep inflation close to a 2 percent target, is today to announce its latest monetary policy decision amid turmoil over the Omicron variant of SARS-CoV-2.
“A wide range of price rises contributed to another steep rise in inflation, which now stands at its highest rate for over a decade,” ONS Chief Economist Grant Fitzner said. “The price of fuel increased notably, pushing average petrol prices higher than we have seen before.”
“Clothing costs — which increased after falling this time last year — along with price rises for food, second-hand cars and increased tobacco duty all helped drive up inflation this month,” Fitzner added.
Inflationary pressures were also fueled by the global supply crunch and jumping commodity prices.
“The cost of goods produced by factories and the price of raw materials have continued to increase significantly to their highest rate for at least 12 years,” Fitzner said.
After countries emerged from COVID-19 pandemic lockdowns this year, companies struggled to meet demand for goods and services, sending inflation soaring.
Runaway energy costs, fueled by reopening economies, have also propelled global inflation.
Central banks use interest rate hikes to try to dampen high inflation, which is weighing on companies and consumers globally.
However, the Bank of England is likely to hold its key interest rate at the current record low of 0.1 percent due to the possible economic impact of Omicron, analysts say.
The inflation data give the bank “enough ammunition to raise interest rates tomorrow, but we still think it is more likely to keep its powder dry until it knows more about the Omicron situation,” Capital Economics chief UK economist Paul Dales said in a note to clients yesterday.
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