UK Inflation Falls From 41-Year High
Consumer price data released by the British government has shown a decline in inflation to 10.7% in November, a decrease from 11.1% in October when the rate was its highest in 41 years.
Facts
- Consumer price data released by the British government has shown a decline in inflation to 10.7% in November, a decrease from 11.1% in October when the rate was its highest in 41 years.
- According to Grant Fitzner, chief economist at the Office for National Statistics (ONS), this is consistent with inflation rates in the US and the eurozone, which have also seen greater than anticipated decreases in November. Particularly, gas prices appear to be lagging behind what they were a year ago.
- The Bank of England (BoE), like other central banks, is fighting a battle against inflation that is much higher than its 2% goal. It has raised rates significantly in the past year, including a 0.75% hike in November — the largest increase in more than three decades.
- November's rate increase was followed by a ninth hike on Thursday of 0.5%, bringing the benchmark lending rate to 3.5% — its highest since 2008.
- Despite a decrease in the rate of inflation, prices continue increasing, most notably in hospitality, dining out, and hotels, according to the ONS. This adds pressure on government officials to raise wages in the public sector to compensate for the difference in earnings and the cost of living.
- The BoE has projected inflation will peak at 11% by the end of 2022. The expectation is that it will decrease significantly to around 5% by the end of 2023 and then gradually decline to 1.4% by 2024.
Sources: Economic Times, Reuters, BNN Bloomberg, Guardian, and Business Insider.
Narratives
- Establishment-critical narrative, as provided by BBC News. A slower rate of inflation might seem like a win to those in the government, but it doesn't do anything to provide relief to people in the real world who continue to face a cost of living crisis. Ahead of the holiday season, the price of celebratory beverages, not to mention food and other basic commodities, is still way beyond the means of most Brits.
- Pro-establishment narrative, as provided by Investment Week. Defeating inflation is a painful process but a necessary one. Despite the stubbornly high prices of certain commodities, a dip in the cost of motor fuels is a reassuring sign that the worst has come and price pressure is easing. The BoE is doing what it can to solve a problem with many external causes, and through its efforts, the UK is now ready to move on to the next phase.
