UK inflation increased again year-on-year in November to 2.6%, having reached 2.3% in October.

The Office for National Statistics (ONS) revealed that month-on-month, consumer price index (CPI) inflation increased by 0.1%. This compares to a 0.2% drop in the same month in 2023.

Core CPI, which excludes energy, food, alcohol and tobacco, increased by 3.5% in the year to November, jumping from 3.3% in October.

The ONS found that transport was the main contributor to the upward trend in inflation, with the average price of motor fuels increasing month-on-month, despite overall prices in the transport division falling by 1.1% in the year to November.

Head of personal finance at Hargreaves Lansdown, Sarah Coles, said: "Inflation is staying put for now, like an unwelcome Christmas party guest hogging the sofa into the small hours. The question is whether it can be shifted, or if it’s going to hang around to ruin our plans for months – eating us out of house and home and driving up the cost of everything again.

"Transport helped drive inflation up, because petrol prices were higher. The oil price fluctuated throughout the month, partly on the back of geopolitical tensions, but also as a result of the market digesting the likely impact of a Trump presidency on supply and demand."

Other contributors to the annual increase in inflation were recreation and culture and clothing and footwear, which jumped by 3.6% and 2%, respectively.

However, month-on-month, restaurants and hotels were the lowest contributor, with contributions falling by 0.04 percentage points.

With these figures in mind, analysts have turned their eyes towards the base rate announcement from the Bank of England tomorrow.

Chief sales and marketing officer at Phoebus, Richard Pike, concluded: "Although expected, this rise probably means any residual hopes in the industry of a drop in the bank rate tomorrow can be packed away until the New Year.

"Today’s figure will be a cause for concern for those consumers who have already been tightening their belts due to austerity measures. However, as with the base rate, inflation will also drop in 2025 – it’s just a question of when rather than if.

"Arrears levels are still under control and this is a good indication that borrowers are prioritising secure debt where they can and lenders are using forbearance techniques where necessary. The expected lower inflation and rates next year will only improve this picture."

---