Rising Inflation Across UK and Eurozone Dims Hopes for Early Interest Rate Cuts Inflation in the UK and eurozone rose in November, with transport costs driving the increase, dampening expectations for interest rate cuts. The Bank of England is likely to keep rates steady as inflationary pressures persist.
Opinions expressed by BIZ Experiences contributors are their own.
You're reading BIZ Experiences United Kingdom, an international franchise of BIZ Experiences Media.
Inflationary pressures across Britain and the eurozone in November have dampened hopes for any quick cuts to interest rates, as rising prices show no signs of easing. In the UK, inflation climbed to 2.6% in November, a noticeable jump from October's 2.3%. The trend was mirrored across the eurozone, where inflation edged up to 2.2%. Among the nations in the region, Belgium experienced the steepest surge, with prices rising 4.8%, while Germany's inflation stood at 2.4%. Meanwhile, France and Italy managed to keep inflation rates below the 2% mark.
This rise in inflation is likely to push the Bank of England to keep interest rates steady at 4.75% when its policymakers meet today. Core inflation, which remains resilient at 3.5%, coupled with persistent inflation in services at 5%, signals that the central bank may face pressure to maintain its tight stance longer than anticipated.
The latest numbers reflect a shift in the UK's economic landscape for November 2024. While inflation came in higher than initially expected by the Bank of England, the results aligned with market forecasts, and they may offer some comfort after the surprising surge in wage inflation earlier this week. The official Consumer Price Index (CPI) rose 2.6% compared to the same month last year, up from October's 2.3%. Core CPI also showed a modest increase to 3.5%, slightly lower than the predicted 3.6%, indicating a bit of relief. Additionally, the RPIX measure, which excludes housing costs, climbed to 3.0%, from 2.8% in the prior month.
Transport costs, particularly a slight uptick in petrol prices, were the primary contributor to the overall inflation spike. While these numbers don't signal an immediate crisis, when considered alongside the recent inflation data and the market's swift response, the likelihood of a rate cut before the close of 2024 seems increasingly remote.
