And she said that even though inflation is still expected to be low spring, the underlying pressure on the Bank of England will be to adjust interest rates. The US Federal Reserve is poised to raise rates on Wednesday, in the first increase for nearly a decade.
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The increase in core CPI reflected steady gains in the cost of rents, airline fares, new motor vehicles and medical care.
Consumer Price Index-based (CPI) inflation for the month of November rose to 5.41 per cent, from 5 per cent in October and the highest in at least a year. Core inflation, on the other hand, increased by 0.2% month on month and 2.0% year on year on the same month.
A warm autumn has seen clothing retailers slashing prices – notably on women’s pants – while falls in the cost of transport, alcohol and smoking were smaller than a year ago. Whereas, the fall in energy prices by 14.7% over the past year contributed toward keeping inflation low.
Gasoline prices plunged by 2.4 percent, while prices for natural gas and fuel oil slumped by 1.9 percent and 1.3 percent, respectively. The jobless rate is at 5%, near what many consider to be full employment.
The UK’s inflation rate returned to a positive level in November, the first time in four months, up to 0.1% after a reading of minus 0.1% in October, according to the Office for National Statistics (ONS).
“Core inflation reached the symbolic 2% mark indicating robust domestic activity despite global disinflationary winds”, Oxford Economics said in a note to clients.
The index for food at home dropped 0.3 percent to 242.2 in November with five of the six major grocery store food groups also declining. Excluding the volatile food and energy categories, so-called core prices rose 0.2%, the same pace of growth as in October and September.
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Higher food prices and anticipated higher government salaries are widely expected to stoke price pressures, making it tougher for the central bank to keep retail inflation around 5 percent by March 2017. Apparel prices fell 0.3 per cent, declining for a third straight month. The core inflation rate measured in those terms came in at 1.3% in October. Core prices are up 2% the past year, the largest increase in 18 months. Overall prices are being held back by a sharp fall in energy costs and a stronger dollar, which makes imports cheaper.
