Inflation to hold again as cost of living levels out
INFLATION is set to hold steady for the third month in a row, as the rise in the cost of living shows signs of peaking.
The Consumer Prices Index (CPI) measure of inflation will remain at 3 per cent in November, according to City consensus figures, suggesting the mounting pressure on household finances is easing.
CPI has paused at 3 per cent throughout October and September, picking up from 2.9 per cent in August and steadily rising from 1.8 per cent at the start of 2017.
The outcome has left Bank of England Governor Mark Carney teetering on the brink of having to write a letter to Chancellor Philip Hammond explaining why inflation is so high.
The Government has set an inflation target of 2 per cent, with protocol dictating that the Bank must contact Mr Hammond if inflation exceeds 3 per cent or falls short of 1 per cent.
The Bank, which hiked interest rates to 0.5 per cent earlier this month, has predicted CPI to peak at 3.2 per cent in the autumn.
The CPI update today will be followed by the Bank’s latest interest rates decision on Thursday, with the Monetary Policy Committee widely expected to keep the cost of borrowing on hold.
Alan Clarke, Scotiabank’s head of European fixed income strategy, said inflation could still deliver an “upward surprise” for November.
However, he added: “We are probably at the peak in inflation for this cycle and inflation should soon begin to slow from these elevated levels.”
Consumers have been enduring a sustained pinch on their spending power since sterling’s Brexit-induced slump, with inflation racing ahead of Britain’s paltry earnings growth. Upward pressure on inflation in October was partly boosted by rising food costs, as annual prices hit their highest level in four years at 4.2 per cent.
On the month, food prices also grew by 0.6 per cent in October, up from a 0.2 per cent fall over the same period last year.
However, Investec analyst Ryan Djajasaputra expects food prices to drag on inflation in November, with some upward pressure coming from transport prices. HOLLYWOOD Bowl, Britain’s biggest ten-pin bowling operator, has reported a sharp rise in profits as the group continues to grow sales and open new sites.
The group, which listed on the stock exchange last year, saw pre-tax profit rocket from £2.6million to £21.1million in the year to September 30.
The figures were flattered by the absence of large exceptional items, which dragged down its performance last year. Boss Stephen Burns said: “I am delighted to report a strong operational and financial performance for our first full year since IPO (initial public offering).
“Our refurbishments have delivered significant returns and new centres opened in the year have performed ahead of expectations.”
The group has more than 50 centres across the UK and opened three new centres – in Derby, Southampton and The London O2 – in the period.