CPI inflation soars to 5.1 PER CENT fuelling fears of ‘stagflation’

Pressure mounts on Bank of England to raise interest rates to curb inflation after headline CPI soars to a 10-YEAR high of 5.1 PER CENT… but experts warn acting too soon could hammer economy amid Omicron chaos

  • CPI rate of inflation rose to 5.1 per cent in November well above expectations
  • The figure is the highest for more than a decade amid fears inflation spiralling
  • Bank of England has been under pressure to raise interest rates to curb prices 


Pressure was today heaped on the Bank of England to raise interest rates after inflation soared above 5 per cent for the first time in a decade.

The headline CPI figure hit 5.1 per cent in November, up from 4.2 per cent the previous month and significantly above expectations.

Spiralling fuel, clothing and food prices underpinned the increase, on the eve of the Bank of England’s rate-setting meeting. 

There have been growing calls for policymakers to act on the threat of inflation running out of control, but analysts say moving tomorrow would deal a hammer blow to the economy with the impact of Omicron still unclear.

Instead the Bank is widely predicted to hold off tomorrow, with February seen as more likely for a rate rise. 

Chancellor Rishi Sunak appealed for people to get booster jabs, saying that was the best way to ‘safeguard’ the economic recovery. 

ONS Chief Economist Grant 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 headline CPI rate hit 5.1 per cent in November, significantly above the expectations of analysts and the highest for more than 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.

‘The costs of goods produced by factories and the price of raw materials have continued to increase significantly to their highest rate for at least twelve years.’

CPI was the highest since September 2011 and a bigger leap than feared.

The Retail Prices Index (RPI) measure of inflation also reached a 30-year peak at 7.1 per cent last month, up from 6 per cent in October.

Laying bare the mounting cost-of-living crisis facing Britons, the ONS reported surging prices across a raft of goods and services.

Figures showed that petrol prices jumped to the highest ever recorded – 145.8p a litre last month – while the cost of used cars also raced higher due to shortages of new motors as supply chain issues continue to affect the economy. 

Mr Sunak said: ‘We know how challenging rising inflation can be for families and households which is why we’re spending £4.2billion to support living standards and provide targeted measures for the most vulnerable over the winter months.

‘With a resurgence of the virus, the most important thing we can do to safeguard the economic recovery is for everyone to get boosted now.’

Economist Samuel Tombs, at Pantheon Macroeconomics, said inflation is now ‘uncomfortably high’ for the Bank, but believes rate-setters will still hold fire this week.

‘The quick ascent of CPI inflation over the last four months probably will not panic the MPC into raising interest rates this week, given that the full extent of the economic damage wrought by Omicron is still unknown,’ he said. 

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘Faced with such a high inflation reading, and with forecasts that the only way is up, the Bank of England would ordinarily be expected to call time on the cheap money party and raise interest rates. 

‘But with the recovery far from being in full swing and the Omicron variant an unruly guest, set to knock back confidence further for many sectors, policymakers may be hot and bothered but are likely to stay in wait-and-see mode tomorrow. 

‘What is pretty certain is that even if ultra-low rates stay put right now, with prices running so hot, there won’t be an extended lock-in with expectations that February is likely to see rates lift.”

Shadow Chief Secretary to the Treasury Pat McFadden said: ‘These figures are a stark illustration of the cost of living crisis facing families this Christmas’

‘From the energy price cap going up, soaring food costs and fuel prices hitting another record high – the list of price crunches as inflation continues to rise goes on and on.

‘Instead of taking action, the government are looking the other way, blaming ‘global problems’ while they trap us in a high tax, low growth cycle.