Inflation in U.K. Hits 5.1 Percent, Highest in a Decade

The pace of price rises is moving faster than the Bank of England’s estimate.,

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Inflation in Britain hits 5.1 percent, the highest in a decade.

Shoppers in Newcastle upon Tyne, England, in October. Prices for fuel and clothing helped push Britain’s inflation rate higher last month.Credit…Mary Turner for The New York Times

Dec. 15, 2021, 6:22 a.m. ET

Inflation in Britain rose 5.1 percent last month, the highest annual rate in more than a decade, driven mainly by jumps in the cost of gasoline and clothing.

The figure is a significant increase from October’s 4.2 percent rate, and shows that prices are rising faster than the Bank of England‘s most recent forecast, which predicted inflation would rise to about 5 percent next spring. The central bank tries to keep inflation at about 2 percent.

Prices for motor fuels were the biggest factor pushing the Consumer Prices Index higher, the Office for National Statistics said. The average gasoline price in Britain last month — 145.8 pence per liter, which translates to about $7.30 a gallon — was the highest recorded since 1990, the agency said.

Inflation, mostly dormant for years, is now soaring around the world. In the United States, the Consumer Price Index climbed by 6.8 percent in the year through November, the fastest pace since 1982, and in Europe it has hit 4.9 percent, a record for the euro. The main trigger has been the jagged reawakening of economies that were largely shut down during the pandemic lockdowns during parts of 2020 and 2021. The surge in activity has caused supply-chain problems, hampered further by labor shortages, as well as shortages of oil and natural gas.

The issue of how to curb prices increases will undoubtedly come up at this week’s Bank of England meeting. The policymakers, who will release a statement tomorrow, have discussed raising the bank’s record-low benchmark interest rate, but must weigh inflation concerns with the recent surge in the Omicron variant, which is expected to rob the economy of some growth.

Since the discovery of the Omicron variant, bets that the central bank would raise interest rates on Thursday have significantly dropped.

“The quick ascent” of inflation won’t panic the Bank of England into raising interest rates this week, Samuel Tombs, an economist at Pantheon Macroeconomics, wrote in a note to clients, because “the full extent of the economic damage wrought by Omicron is still unknown.”

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