Hammond will be receiving a letter from Carney explaining why inflation rose | City & Business | Finance

The Bank of England missed its inflation target for November as prices increased at its fastest rate in five years.

The Office for National Statistics (ONS) revealed the consumer price index (CPI) rose to 3.1 per cent. 

A fall in the value of the pound against the main currencies of its trading partners has led to higher import prices which has been felt by consumers.

The BoE Governor must always write a letter to the Chancellor if inflation rises above the two per cent target by more than one percentage point. 

The last time inflation was too high was in February 2012 when governor Mervyn King had to send a letter to then chancellor George Osborne. 

The letter will not be published until next February as the Monetary Policy Committee are meeting this week. 

Vince Cable, leader of the Liberal Democrats, believes the tables should be turned and the Chancellor should write a letter to the Governor as he believes the reason why inflation has risen is due to the governments Brexit policy.

He told the Financial Times: “Philip Hammond knows why inflation has risen so sharply: it is because the Government is pursuing the most extreme Brexit, which has continued to suppress the value of the pound and pushed up prices.” 

Downing street has predicted inflation to decrease but acknowledges it will hit households financially especially in the run up to christmas. 

Items, such as food, transport and toys are set to become more expensive. 

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.”

Electricity prices also rose 11 per cent in November which put more pressure on inflation to rise as did global oil prices as an index of producer prices showed an increase in price.

Despite this, analysts expected inflation to remain at three per cent. 


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