UK November 2024 Inflation Jumps Again to 2.6% pa

The Office for National Statistics (ONS) has this morning released inflation figures for the UK for November 2024.

November 2024 Consumer Prices Index (CPI) climbed again by 0.3% to 2.6% pa.  This is now 0.9% higher than it was in September at 1.7% pa.  This is no surprise given Conservative policy was to manage inflation down, but Labour’s Fiscal policy is to tax us more and then spend more on infrastructure and public services.

Upward pressure came from Owner Occupiers Housing (OOH) costs which increased by a massive 7.8% pa, still stubbornly high and up from 7.2% pa two months ago.  Alcohol/tobacco (+6.8%), health (+5.5%) and education (+5.0%).

Downward pressure came again from transport (-1.1%) and furniture/household goods (-0.5%).

RPI Up by 0.1%

The old measure of inflation RPI, an arithmetical mean of the average prices of a basket of household spending (rather than the geometric mean for CPI) and still our preferred measure of real inflation, climbed again but only 0.2% to 3.6% pa in November but this is still only just above August’s figure of 3.5% pa.  This is the 2^nd consecutive month that RPI has remained stubborn and increased.

Comment

Last month, we forecast there would be no interest rate cut tomorrow (19^th December) and the picture from mortgage lenders is confused with some reducing mortgage rates and others increasing rates this week.

The ‘Tax/NIC’ hit by the Labour Government is not going to help inflation or interest rates in 2025.  Employer’s national insurance contributions increasing from 12.8% to 15% and the secondary earnings threshold (the point at which employers pay NIC on their employee’s earnings) will reduce from £175 per week (£9,100 pa) to just £97 per week (£5,000 pa).  With National Living Wage at £12.21 per week, this means an employer will be pay employers NIC even if a part-timer works just 8 hours per week.

These increased costs will no doubt be passed onto consumers as it will be retail, supermarket and hospitality employers that will be hardest hit by this.  Labour is stimulating inflation, whether we like it or not, and we have long suggested that all Governments need high inflation to devalue their massive public sector and covid-19 debt mountains. 

We do not expect the Bank of England to cut interest rates tomorrow and 2025 could be yet another painful year with no interest rate reduction before inflation and rates fall back again.  Recession here we come ….

Key dates for us all: 

• Next ONS inflation report 15 January 2024.
• Next Bank of England MPC interest rate decisions 19 December 2024 and then 6 February 2025.