London
The year-on-year pace at which consumer prices are rising slowed in November, to 10.7%, from October’s 41-year high of 11.1%, according to the consumer price index (CPI). That is still far in excess of the Bank of England’s 2% target. Nevertheless, the Bank “can breathe a sigh of relief knowing… inflation has peaked”, says Paul Dales of Capital Economics. First, inflationary pressures on goods, much of which is driven by global trends, such as petrol prices, have peaked. Second, underlying inflationary pressures are starting to ease – inflation in services (which accounts for 79% of output) was steady at 6.3%, which may well prove to be the two-year peak, while annual core inflation, which strips out volatile food and energy prices, fell to 6.3% from 6.5% a month earlier. The odds of interest rates reaching 4.5% are starting to look a little slimmer. Still, inflation of 10.7% will do nothing to appease workers striking over the cost of living, says AJ
