Inflation rises for second month in a row

Inflation has risen for the second month in a row, according to official figures.

The overall rate of price rises - as measured by the consumer price index (CPI) - grew by 2.6% in November, a significant rise.

It's a further move away from the Bank of England's target 2% inflation rate after the rate ticked up to 2.3% in October, the first increase in three months.

Money latest: What inflation figure means for you

The increase is due to the higher cost of clothing, petrol and diesel, compared to last year, the ONS said.

While the 2.6% figure was expected by economists, it is above the 2.4% rate the Bank had predicted.

Costlier tobacco products also contributed to the change. Higher tobacco duty announced in the October budget could make this a persistent inflation driver.

Acting to slow price rises were plane tickets, which had the largest monthly drop since records began.

While the main measure of inflation, the CPI, was as economists expected, other measures were lower than forecast.

A look behind the headline figure

Another important measure of inflation watched by the rate-setters at the Bank is core inflation, which measures price rises but excludes food and energy costs as they're liable to sharply fall or rise.

Core inflation rose to 3.5%, less than the 3.6% anticipated by economists polled by Reuters.

Similarly, services inflation, which is impacted by rising wages, remained at 5% despite a forecast rise.

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What does it mean for interest rates?

Borrowing costs were already deemed unlikely to be changed by the Bank at their next meeting on Thursday.

But the likelihood of a February interest rate cut is now higher. Traders are pricing in a 53% chance of a drop at the Bank's Monetary Policy Committee meeting after next - before this morning's inflation announcement that was a 48% chance.

In response to the data, Chancellor Rachel Reeves said today's figures are a "reminder that for too long the economy has not worked for working people".

She added: "That's why at the budget we protected their payslips with no rise in their national insurance, income tax or VAT, boosted the national living wage by £1,400 and froze fuel duty.

"Since we arrived real wages have grown at their fastest in three years. That's an extra £20 a week after inflation. But I know there is more to do."

(c) Sky News 2024: Inflation rises for second month in a row