PwC comments on the CPI figures for November 2024

Adam Deasy, Economist at PwC UK, said:

“The anticipated uptick in inflation has continued, as headline CPI inflation came in at 2.6% in November, largely in line with consensus and Bank expectations. Transport prices provided the largest upward contribution, despite the most significant fall in air fares for the month of November since 2001. Recent Ofgem price cap increases also drive this rise, as the price cap reductions in late 2023 continue to drop out of the annual comparison. 

“We are still seeing stubborn services inflation, up to 5.7%, and yesterday’s pay growth surge for the three months to October underscores a labour market that, at least in terms of wages, is only gradually cooling. While none of this was unexpected, it underscores that getting inflation back to target will hinge on grappling with these persistent pressures. The extent to which firms can pass on higher labour costs, including increased NICs, onto consumers may prove an important determinant of services inflation in the short term.

“Where does that leave us? Andrew Bailey has recently signalled his expectations of four rate cuts in 2025. Whether domestic or geopolitical developments blow that off track, it remains fairly certain that the Bank is likely to hold off on any movements when they meet tomorrow, with the rate cutting cycle anticipated to resume early in the new year.” 

ENDS