Investing.com -- British inflation reached an eight-month high in November, with consumer prices increasing by an annual 2.6%, up from 2.3% in October, according to official data.
This is the highest inflation rate since March, marking a continuous monthly rise in inflation and highlighting persistent price pressures within the UK economy.
Despite this, the rise in services prices, an indicator closely monitored by the Bank of England (BoE) as a measure of underlying inflationary pressures, remained steady.
The steady services inflation rate offered some relief to the central bank. The Office for National Statistics reported that services inflation held at 5.0% in November, unchanged from October.
Despite expectations from economists for a slight increase to 5.1%, and the BoE's anticipation of a dip to 4.9%, the rate remained stable.
Investors slightly increased their bets on interest rate cuts by the BoE next year, following a reduction in these bets earlier in the week due to strong wage growth data. This shift in investor sentiment coincided with a weakening of the sterling.
The inflation rise moves further away from September's 1.7%, which was the first time inflation had fallen below the BoE's 2% target in nearly three-and-a-half years. During this period, the inflation rate had reached a peak of over 11%.
"Given this mixed dataset, we continue to expect the Committee to vote 8-1 to hold Bank Rate at 4.75% at tomorrow’s meeting and reiterate that it sees a gradual approach to policy easing as appropriate based on the evolving evidence," Goldman Sachs (NYSE:GS) economist Sven Jari Stehn said in a note.
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