U.K. inflation held at its lowest rate in three years in November, providing ammunition for interest-rate doves as the Bank of England prepares to announce its final decision of the year.
Consumer prices rose 1.5% from a year earlier, matching the smallest increase since November 2016, the Office for National Statistics said Wednesday. Economists had forecast a fall to 1.4%.
The figures are nonetheless likely to reinforce the dovish tilt at the BOE, where policy makers Michael Saunders and Jonathan Haskel are expected to repeat their calls for lower interest rates on Thursday amid mounting signs of economic weakness.
Inflation is running well below the BOE’s 2% target, and at less than half the pace of earnings growth. The central bank expects it to slow further next year and stay below target until the second half of 2021.
Downward pressure on inflation came from tobacco prices, with the decision not to hold a budget in November meaning that duties remained unchanged. By contrast, they rose sharply a year earlier. The falling cost of overnight hotel stays also played a role.
Source : Bloomberg