Inflation squeezes Christmas budgets as it hits 3.1%

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inflation

UK consumers are set to see their Christmas budgets squeezed as the rate of inflation hit a six-year high of 3.1 per cent in November.

According to the Office for National Statistics (ONS), food prices have jumped 4.1 per cent on last year, while clothing and footwear have also risen three per cent.

Despite many analysts predicting that inflation had peaked, separate ONS figures of producer prices, which measure the cost of fuel and raw materials, jumped 7.3 per cent year-on-year, up from 4.3 per cent in October.

Factory gate prices also rose three per cent year-on-year.

The peak in inflation means that Bank of England governor Mark Carney will have to pen a letter to Chancellor Philip Hammond to explain why the bank has failed to keep rising prices within government targets.

“CPI inflation edged above three per cent for the first time in nearly six years, with the price of computer games rising and airfares falling more slowly than this time last year,” ONS head of inflation Mike Prestwood said.

“These upward pressures were partly offset by falling costs of computer equipment.

“The prices of raw materials and goods leaving factories continued to increase as oil and petrol prices continued to rise.

“Annual rises in house prices and rents continued to slow, with London seeing house price falls for the second month running.”

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