Carney to explain why inflation has hit 3.1%

12 Dec 17

The governor of the Bank of England Mark Carney is to write to chancellor Philip Hammond to explain why the Consumer Prices Index has reached 3.1%.

The latest Office for National Statistics figures revealed the CPI 12-month rate for November 2017 rose 0.1 percentage point, breaking the UK’s 2% target by more than 1 percentage point.

This triggered a requirement for Carney to present a formal explanation. The last time he did so was in December last year.

Last month the Bank of England doubled interest rates from 0.25% to 0.5%, the first increase in a decade, amid concerns about rising inflation.

CPI then hit a five-year high in October.

The ONS said the latest rise was in the main caused by air fares and rising prices for recreational goods such as computer games.

Mel Stride, financial secretary to the Treasury, said: “Inflation is expected to fall over the coming year, but I recognise families are feeling a squeeze now.

“We are determined to help, which is why the Autumn Budget cut income tax, boosted basic pay by more than inflation and froze alcohol and fuel duties.”

The Unison union warned that many public service workers were “facing a bleak Christmas”.

General secretary Dave Prentis said: “With wages now lagging even further behind the cost of living, the government’s punishing pay cap is pushing families to the brink.

“It’s time that all public service workers received a decent pay rise that at least matches the rate of inflation."

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