By Max Clarke
The UK’s inflation rate rose to a 6 month high of 3.3% as retail and customer indices, driven largely by food and clothing prices rising 1.6 and 2.0% respectively, were up for the month of November.
The Bank of England’s monetary policy committee had announced last week that no new quantitative easing had been announced. In light of the climbing interest rate, this policy appears likely to remain; though James Knightly of ING, speaking to the Telegraph, commented:
“Given the stronger tone to recent activity data there is little prospect of any policy changes over the next 3-6 months. That said, we still feel that there is a good chance of further QE at some point next year as fiscal austerity, ongoing credit constraints, deleveraging and negative real wage growth weigh on activity and dampen the inflation threat."
This inflation is, however, not unexpected, and the Bank of England predicts it to climb to 3.5% in the first quarter of next year.