INFLATION defied expectations to remain high in November, with consumer price inflation (CPI) staying unchanged at 2.7 per cent year-on-year, according to official figures released yesterday.
A large part of the year-on-year increase is a result of price rises in food and non-alcoholic beverages as poor harvests around the globe push up the cost of basic supplies. This was partly offset by small falls in the cost of transport and household goods such as furniture.
Wages have not kept pace with the sustained period of high inflation and yesterday’s data is bad news for retailers and customers alike as the Christmas period approaches.
“This latest reading confirms that inflation has remained above the Bank of England’s two per cent central target for three full years, underlining the prolonged nature of the squeeze on UK consumers’ finances,” said analyst Osman Ismail at the Centre for Economics and Business Research.
He added: “The chancellor’s Autumn Statement announced that from next April, annual increases in many working-age benefits will be restrained to just one per cent, meaning that the poorest will feel their disposable incomes squeezed especially tightly.”
Last week the incoming Bank of England governor Mark Carney raised the possibility of central banks instead targeting nominal gross domestic product – a mix of GDP and inflation – rather than a single inflation rate, though he stopped short of saying this would be right for Britain.
Stubbornly high inflation has caused the central bank to vote against injecting more cash into the economy through quantitative easing in recent months.