Inflation rose to an eight-month high in November, according to the latest official figures.
The Office for National Statistics (ONS) has found that the Consumer Price Index, which measures the average change in prices over the last 12 months, crept up from 2.3% in October to 2.6% last month.
The news will come as a blow to chancellor Rachel Reeves – who unveiled a dramatic, tax-raising Budget in October – and PM Keir Starmer, because it means the rise in prices is shooting beyond the Bank of England’s 2% target.
The Bank tries to keep inflation at that level because that is meant to help the economy grow at a steady rate while stopping consumers from being priced out of necessities.
As inflation already increased from 1.7% to 2.3% in October, the Bank is now less likely to reduce their main interest rate – which sets out the general cost of borrowing – on Thursday.
The Bank’s interest rate is at 4.75% at the moment, and there had been hopes that it would fall considerably over the next 12 months.
According to the ONS, the biggest reason behind the rise in inflation was fuel and clothing.
Housing and household services – including rent – also rose by 3.5%.
However, it’s worth remembering that the rise to 2.6% was still in line with economists’ forecasts and a long way off the height of the cost of living crisis in October 2022, when it reached a peak of 11.1%.
Chief economist at the ONS Grant Fitzner said: “Inflation rose again this month as prices of motor fuel and clothing increased this year but fell a year ago.
“This was partially offset by air fares, which traditionally dip at this time of year, but saw their largest drop in November since records began at the start of the century.”
Reeves commented: “I know families are still struggling with the cost of living and today’s figures are a reminder that for too long the economy has not worked for working people.
“I am fighting to put more money in the pockets of working people. That’s why at the Budget we protected their payslips with no rise in their national insurance, income tax or VAT, boosted the national living wage by £1,400 and froze fuel duty.
“Since we arrived real wages have grown at their fastest in three years. That’s an extra £20 a week after inflation. But I know there is more to do. I want working people to be better off which is what our Plan for Change will deliver.”
Shadow chancellor Mel Stride said: “The chancellor has made a series of irresponsible and inflationary decisions.
“These figures mean higher costs in the shops, less money in working people’s pockets and risks keeping mortgage rates higher for longer.”
