UK inflation climbs above 3%

Bloomberg

UK inflation unexpectedly accelerated to the fastest in more than 5 1/2 years in November, which will force Bank of England Governor Mark Carney to explain why price growth is so far above his policy target.
The 3.1 percent rate was stronger than economists had forecast and the highest since March 2012. The Office for National Statistics said that the increase was driven by the cost of air fares and computer games.
While inflation is forecast to slow in 2018, what matters for Carney will be the development of domestic price pressures. The BOE increased its benchmark interest rate for the first time in a decade, saying low unemployment and a squeeze on supply could fuel faster wage growth.
The latest data mean Carney has to write to Chancellor of the Exchequer Philip Hammond explaining why inflation is more than 1 percentage point away from the official 2 percent target.
The letter will be published alongside the BOE’s policy decision in February as the Monetary Policy Committee has started its meetings for its December 14
announcement.
Markets expect no further rate increases until late 2018, a view echoed in a survey of economists published. Bloomberg Economics sees the benchmark, currently at 0.5 percent, staying on hold for all of next year.
“Inflation bounced higher in November, but only because of the extremely volatile price of flights.