British inflation climbed to an eight-month high in November, with annual consumer prices increasing by 2.6%, up from 2.3% in October.
While the rise was in line with economists’ expectations, a key underlying measure of price pressure closely monitored by the Bank of England (BoE) remained steady, providing some relief for policymakers.
The November inflation rate marked a further departure from September’s 1.7%, the first time in more than three years that inflation dipped below the BoE’s 2% target. The latest increase was the largest since March, according to the Office for National Statistics (ONS).
The BoE had projected inflation would reach 2.4% in November, as outlined in its forecasts six weeks ago, but actual figures came in slightly higher.
Service price inflation—a critical measure of domestic price pressures—remained at 5.0% in November, unchanged from October. The BoE had anticipated a dip to 4.9%, while most economists in a Reuters poll expected it to edge higher to 5.1%.
Sterling fell against the dollar following the release of the data.
Despite signs of slowing momentum in the British economy, the BoE has indicated it will proceed cautiously with any future interest rate cuts. The central bank is widely expected to hold interest rates steady during its December meeting on Thursday.
