U.K. Inflation Rate Rises to Highest in Six Months (Update2)
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Dec. 15 (Bloomberg) — U.K. inflation accelerated more than economists forecast in November to the fastest pace in six months, driven by fuel and transport costs.
Consumer prices increased 1.9 percent from a year earlier, compared with a 1.5 percent gain the previous month, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 29 economists was 1.8 percent. On the month, prices rose 0.3 percent.
The inflation rate will rise next year to about 3 percent, close to the upper limit of the government target, before dropping again, finance minister Alistair Darling said last week. The Bank of England has kept up spending on its 200 billion-pound ($326 billion) bond plan as it tries to get the rate to the 2 percent goal in the medium term and stave off the threat of deflation.
“The upside risk is going to intensify over the next couple of months,” James Knightley, an economist at ING Financial Markets in London, said by telephone. “There is a risk that we may get a rate over 3 percent by January. What would concern the BOE is if market expectations of inflation and household surveys rose and that could make them tighten policy quicker.”