Published December 18, 2012
LONDON – British inflation unexpectedly remained at its highest level since May in November, data showed, reinforcing Bank of England worries that price pressures may prove persistent.
The Office for National Statistics said on Tuesday that annual consumer price inflation held at 2.7 percent after a surprise jump in October, compared to economists' forecasts for a dip to 2.6 percent.
A fall in petrol prices was not enough to outweigh price rises for other items, such as food, particularly bread and potatoes, the ONS data showed.
Services price inflation accelerated to 4.2 percent, its highest since December 2011.
In its quarterly forecasts released last month, the Bank of England said British inflation was likely to be significantly higher over the next 18 months than expected in August.
The central bank's projections showed that it would take until the third quarter of 2014 before inflation fell below its 2 percent target, nine months later than predicted in August, despite sluggish economic growth.
Stubbornly high inflation deterred some policymakers from approving another cash boost for the economy in November, and earlier this month the BoE again voted against more government bond purchases.
Minutes of its last policy meeting due to be released on Wednesday will provide an insight into what drove that decision.
Worries about price rises are likely to have been among the reasons, as rate-setter Paul Fisher said last week that he would wait for signs that inflation was coming down before voting to extend asset purchases beyond the current total of 375 billion pounds.
Separate data published by the ONS showed that annual factory-gate inflation eased unexpectedly in November to 2.2 percent - its lowest since July - from an upwardly revised 2.6 percent in October, as input costs fell 0.3 percent on the year.
The annual rate of fuel cost inflation eased to its slowest since February 2011.
(Reporting by Olesya Dmitracova and David Milliken)