Today’s inflation print, which revealed that consumer prices increased by 2.6% year on year in November, “will only reinforce the MPC (Monetary Policy Committee)’s message of patience and gradualism”, reckon Deutsche Bank analysts.
There was some good news to be gleaned from the data, said the bank.
Specifically, core inflation, which excludes volatile food and energy prices, was slightly better than expected at 3.5% against the Bank of England’s 3.6% forecast.
But Deutsche noted that price pressures are starting to resurface following Labour’s first Budget.
Chancellor Rachel Reeves’ decision to increase employers’ National Insurance Contributions (NICs) means employers will “likely” start ramping up goods prices from next year, said the bank’s analysts.
“Put bluntly, the MPC is some way away from declaring victory on inflation,” they said.