"Higher inflation means the pound in your pocket won't stretch as far and many will be thinking how they can make their money work harder".
- Tom Stevenson, Fidelity International
According to the Office for National Statistics, the UK's cost of living went up to 1.2% in November, showing the highest level in more than two years. Analysts had expected the rate to climb to 1.1%. The ONS said the biggest factor pushing inflation up last month was a rise in clothing prices, which increased by 1.6% between October and November this year, compared with a fall of 0.1% between the same two months a year ago. Moreover, motor fuels and a 'variety of recreational and cultural goods and services', including hotel and restaurant charges, were also the main contributors to November's increased rate as well as the fall in the value of the pound since the Brexit vote also is fueling a rise in the cost of living. Overall, a basket of goods and services that cost £100 in November 2015 would have cost £101.20 last month.
In the meantime, the Bank of England expects prices to keep rising in the coming months, as last year's harsh decline in the oil price falls out of the headline rate and the impact of the decline in the pound continues to feed through to consumer costs. As the result the value of the pound against the dollar and euro in early trading advanced.
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