Sterling gets only brief boost as United Kingdom inflation hits six-year high

Sterling gets only brief boost as United Kingdom inflation hits six-year high

Inflation in protein rich eggs shot to 7.95 per cent in November on annual basis, as against 0.69 per cent in the previous month.

United Kingdom inflation accelerated to a more than five year high in November, data from the Office for National Statistics showed Tuesday.

France's Socgen said in a research note it expected inflation to hit 3.2 percent, an outcome which would require Mark Carney, the governor of the Bank of England, to explain himself in writing to the finance minister, Philip Hammond.

"Any faster-than-expected removal of central bank liquidity could be a shock to a range of asset classes - stocks, bonds, cryptocurrencies, art, you name it - which have feasted off cheap money and a sustained increase in inflation could be an early signal that the bull market party is moving into its final phases".

"At least it'll be an easy letter to write, and he'll have a ready answer as to why inflation is so high - we're still seeing the effect of the weaker pound filtering through to prices".

Economists believe inflation should be at its peak now, though price rises may only decline slowly in the coming months.

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Inflation rose to 3.1% in November, the highest in almost six years, as the squeeze on households continued. The Bank of England has a tricky tightrope to walk.

Inflation reached 3.1% in the year to November 2017, the highest level recorded for more than five years.

Spurred by increase in fruit and vegetables prices, annual retail food inflation climbed to 4.42 per cent in November from 1.90 percent the previous month.

According to the data from the Ministry of Statistics & Programme Implementation, consumer price index (CPI) inflation in November rose to 4.88 per cent from 3.58 per cent reported for October. Despite the pressure, RBI had refrained from cutting interest rates since the last decrease in August, on account of inflationary trends. Too much inflation could threaten the Bank's credibility and therefore its grip on the economy.

Inflation rose at the highest rate in almost six years last month, according to ONS figures, with airfares and computer games contributing to the increase.

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