United Kingdom

UK inflation rate higher than expected


Britain's annual inflation rate has risen to 3.3 per cent as increasing commodity prices have prompted record food and clothing price hikes. The inflation figure has risen from 3.2 per cent in October, according to the Office for National Statistics (ONS). The latest figure could prompt the Bank of England to increase interests rates sooner than expected, economists say.


The ONS said prices of food and non-alcoholic drinks rose by a record 1.6 per cent for the October to November period. Clothing and footwear prices increased by two per cent, the highest ever rise for the month.

Cotton prices recently broke record highs and grain reached multi-year peaks owing to tight supplies amid strong demand.

But air fares fell by 6.4 per cent, compared with a fall of 2.6 per cent a year ago, while prices in recreation and culture also dropped slightly.

Belt-tightening will continue into 2011 with a hike in Britain's VAT sales tax on goods and services from 17.5 per cent to 20 per cent, due to come into effect on 4 January.

Britain faces massive cuts to public spending in 2011 as the coalition government seeks to slash a massive state deficit.

The latest data comes less than a week after the Bank of England voted to keep its key interest rate at its current record low of 0.5 per cent, amid expectations that the country's economic recovery will slow next year.

The UK's 3.2 per cent October figure was signigicantly higher than the European Union's 2.3 per cent.

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