LONDON: UK inflation surged to its highest level in more than a decade in November, exceeding 5% months before the Bank of England (BoE) had expected.

       Increases in the price of clothing, auto fuel and second-hand cars drove consumer prices up 5.1% from a year earlier, according to data released yesterday.

       Core inflation, which strips out energy and other volatile items, climbed to 4%, the highest since 1992.

       The overall rate of inflation was up from 4.2% in October. It has increased by 3.1 percentage points in the space of just four months, the fastest gain on record.

       Without the threat posed by the Omicron variant, the figures, as well as data pointing to a strengthening labour market, may have been enough for the BoE to raise interest rates today. But with new government restrictions adding to economic uncertainty, investors and economists expect the Monetary Policy Committee (MPC) to delay the move until February.

       The pound gained 0.2% after the data in London. Government bonds fell, sending the yield on 10-year securities two basis points higher to 0.737%.

       The reading will be “uncomfortably high for the MPC, but Omicron necessitates a little more patience,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

       Nonetheless, the jump above 5% comes far sooner than the BoE had expected, with officials only predicting the measure would peak around that level in the second quarter of next year.

       “The data adds to the case for raising interest rates sooner rather than later. The labour market is tight, and with inflation high, there’s a risk that expectations about future price gains become unanchored. That would open the door to a period of persistent inflation. The strength of recent data means an interest rate rise from the BoE can’t be ruled out. But our base case is that the central bank holds off lifting rates, citing uncertainty about the omicron variant,” said Bloomberg economist Dan Hanson,

       Some forecast even faster gains in 2022. In its regular economic stock-take of the UK, the International Monetary Fund this week said the rate could hit 5.5% in the spring, as it cautioned the BoE against “inaction bias.”

       For policy makers, the worry is that price increases could start seeping into wages, making it harder to bring inflation back to its 2% target. Data showed annual pay gains excluding bonus climbed 4.3% in the three months to October.

       “It is concerning that inflation is outpacing wages and if this disparity continues to increase as we predict, real household incomes will be squeezed further, dampening consumer spending, and weakening overall economic activity,” said Suren Thiru, head of economics at the British Chambers of Commerce.

       The Office for National Statistics (ONS)report also showed retail price inflation, which is used to set interest payments on index-linked bonds and student loan repayments, climbed to 7.1% in November, the fastest pace since early 1991.

       Clothing and footwear prices rose 1.1% in November. That contrasts with a year earlier, when they fell 2.7% as England’s second lockdown led stores to discount prices.

       Petroleum and diesel prices surged 5.1%, and the price of second-hand cars gained 3.1%. The ONS reported a reduced supply of used cars for sale. Demand continues to be fuelled by shortages of new cars linked to a lack of semiconductor chips.

       Factories raised prices by 9.1% in the year to November in response to a 14.3% surge in fuel and raw materials. — Bloomberg