U.K. annual inflation increased to 3.1% in November, the highest since March 2012 and above the level obliging the Bank of England to write a letter of explanation to the government, data from the Office for National Statistics showed.
Inflation jumped from 3.0% in October. The governor of the Bank of England has to write an open letter to the U.K. finance minister whenever inflation diverges from the central bank's 2% target by more than 1 percentage point in either direction.
The pound was little changed at $1.3341 at 10 a.m. London time, shortly after the news, which came after the Bank of England raised interest rates for the first time in a decade Nov. 2, boosting the bank rate by 25 basis points to 0.5%.
Month over month, consume price inflation advanced by 0.4% from a 0.1% increase in October. Including owner-occupiers' housing costs, annual inflation remained unchanged at 2.8% in November.
The biggest upward contribution to inflation originated from air fares, which declined between October and November but by less than a year ago. Rising prices for a range of recreational and cultural products and services, particularly computer games, also contributed to the upward pressure.
In another statistical set, monthly producer price inflation rose by 0.3% in November, up from 0.2% growth in the previous month. In annual terms, producer price inflation increased to 3.0% from 2.8% in October. The November reading was the 17th successive month of positive inflation.
Materials and fuel price inflation went up 0.8 percentage point to 1.8% in November. On an annual basis, these input prices advanced by 7.3%, up 2.5 percentage points from October. Core input inflation stood at 4.6% on the year to November, up from 3.4% in the prior month.
