Inflation shock as rate soars to 5.1% – ‘beyond Bank of England’s target’

Expert explains if we can invest our way out of inflation

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The central bank had initially predicted a rise to 4.7 percent in November, but data shows it has outgrown this pace. This rise is further evidence that rising household bills and energy prices are continuing to squeeze the pockets of everyday Britons. The figures have importantly been announced a day ahead of the Bank of England’s decision to hike interest interest rates.

Shachar Bialick, CEO and founder of Curve, commented on the matter, and said: “Inflation is continuing to surge even after last month’s 10-year high.

“UK inflation is remarkably high, well above the Government’s two percent target, and high inflation pushes up prices which reduces people’s purchasing power in real terms.

“Inflation expectations for the year ahead have also jumped to 3.2 percent, up from 2.7 percent in August.

“There is potential for Omicron to keep high inflation for longer, squeezing household incomes at an already challenging time.”

Grant Fitzner, the ONS’ Chief Executive, cited the rising price of fuel and everyday living costs, such as clothing, as the reason why inflation has continued to grow in recent months.

Mr Fitzner said: “A wide range of price rises contributed to another steep rise in inflation, which now stands at its highest rate for over a decade.

“The price of fuel increased notably, pushing average petrol prices higher than we have seen before.

“Clothing costs – which increased after falling this time last year – along with price rises for food, second-hand cars and increased tobacco duty all helped drive up inflation this month.”

Notably, independent think-tank the Resolution Foundation warned the UK was experiencing its third real “wage squeeze” in the last decade, which is also leading to inflation to soar.

Reacting to the announcement on Twitter, the organisation said: “Far from the overheating labour market feared earlier in the year, the UK is facing its third real wage squeeze in a decade. And the gloomy outlook for living standards looks set to continue well into next year.

“The economy needs wage growth high enough to improve living standards, but not so high as to push up firms’ costs and raise inflation above target.

“Today’s data shows that after months of worrying about the latter, the challenge facing the labour market is one of falling incomes.”

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