The UK’s annual inflation rate rose for the second consecutive month, reaching 2.6% in November 2024, up from 2.3% in October. This increase aligns with market expectations and marks the highest inflation rate in eight months. The uptick reflects faster price growth in several sectors, notably recreation and culture, where inflation accelerated to 3.6% from 3% in October, driven by higher admission fees for live music events, theaters, and computer games.

Key Drivers of Inflation

Housing and utilities contributed significantly to the inflation rise, with prices climbing 3%, slightly up from 2.9% the previous month. This was fueled by increases in actual rents for housing. Additionally, food and non-alcoholic beverages saw prices grow by 2%, compared to 1.9% in October. Transport prices, while still in decline, fell at a slower rate of -0.9%, compared to -1.9% in October. This was due to upward pressure from motor fuels and second-hand car prices, partially counterbalanced by reduced airfares.

Services Inflation Holds Steady

Services inflation remained unchanged at a high of 5%, signaling persistent price pressures in non-goods-related sectors. Meanwhile, the Consumer Price Index (CPI) rose by 0.1% on the month, a slower pace compared to the 0.6% increase observed in October. The monthly inflation figure also aligned with forecasts, indicating no surprises in the short-term trend.

Core CPI Growth Slows

Core inflation, which excludes volatile items like food and energy, rose by 3.5% in November compared to 3.3% in October, though it fell short of the anticipated 3.6%. On a monthly basis, core prices stalled, reflecting a temporary pause in underlying inflationary pressures. These trends highlight a mixed picture for the UK economy, with broad price increases offset by some moderation in core categories.