MNI DATA ANALYSIS: UK Nov CPI at 5-Yr High on Air Fares>

-UK Nov CPI +3.1% y/y vs +3.0% in Oct

-UK Nov Input PPI +7.3% y/y vs +4.8% in Oct

-UK Nov CPIH +2.8% y/y vs +2.8% in Oct

-UK Oct House Price Index +4.5% y/y, smallest rise since May

     By Laurie Laird and David Robinson 

     London (MNI) - Consumer price inflation rose to a more than 

five-year-high in November, boosted by air fares, while a jump in crude 

oil prices fuelled an acceleration in intermediate inflation. 

     The consumer price index increased by an annual rate of 3.1% last 

month, the fastest pace since a 3.5% gain in March of 2012, exceeding 

the MNI median forecast of 3.0% and the 3.0% rise in October. 

     Consumer transport prices jumped by 4.5% over November of 2016, 

adding 0.07 percentage points to the change in annual CPI. 

     Air fares tend to fall in November, but declined by an annual rate 

of just 10.4% last month, after a 13.4% retreat in October, exerting an 

upward influence on consumer prices in November, according to a National 

Statistics official.  

     The result topped the Bank of England staff forecast of a 3.0% 

annual rise in November as reported in the November Quarterly Inflation 

Report. That takes inflation above the Bank's 2.0% target for the tenth 

straight month. 

     Governor Mark Carney is obligated to write a letter to the 

Chancellor of the Exchequer explaining gr more-than-one-percentage 

deviations from the Bank's inflation target. 

     However, Bank of England forecasters believe consumer price 

inflation will peak by year end and recede in 2018, according to minutes 

of the Monetary Policy Committee meeting in November. The MPC voted to 

lift Bank Rate to 0.5% from 0.25%, with members agreeing that any 

"future increases in [the] Bank Rate would be expected to be at a 

gradual pace and to a limited extent." 

     Consumer prices rose by 0.3% between October and November, after 

rising by 0.1% between September and October, compared to the MNI median 

of a 0.1% monthly gain. 

     Food and non-alcoholic beverage prices jumped by an annual rate of 

4.1%, the biggest rise since September of 2013, adding 0.01 percentage 

points from change in annual CPI, the tenth straight rise after 31 

consecutive months of decline. 

     Food products are one of the more "import-intensive" components of 

the CPI basket, and could be affected by the decline in the value of 

sterling since the EU referendum, according to the official. Chocolate 

products represented the "main driver" of increased food prices, he 

added. 

     CPIH, which regained its status as a national statistic with the 

release of the July data, steadied at an annual rate of 2.8%, unchanged 

from October. CPIH had been downgraded as a national statistic, but the 

Bank of England continues to target CPI even with the recertification of 

CPIH. 

     A surge in energy prices ignited intermediate price inflation, with 

producer input prices jumping by 1.8% between October and November, for 

an annual gain of 7.3%, above the MNI median of 6.7%, up from 4.8% in 

October.  

     Crude oil prices sky rocketed by 27.5% in the year to November, 

after recording a 10.2% annual rise in the previous month, according to 

an official. 

     Imported material prices, which comprise some two thirds of inputs 

to the manufacturing sector, increased by an annual rate of 7.4% last 

month, after a 4.1% increase in October. 

     Output PPI also accelerated, rising by 0.3% between October and 

November, for a 3.0% annual gain, matching the MNI median, up from 2.8% 

in October. 

     Stripping out food and energy, annual core consumer inflation 

steadied at 2.7%,matching the MNI median forecast and the 2.7% pace 

recorded in October. 

     Retail price inflation ebbed, with RPI rising by an annual rate of 

3.9% in November, dwon from a 4.0% pace in October, below the MNI median 

of a 4.0% increase. 

     Stripping out mortgage interest payments, RPI-X rose by an annual 

rate of 4.0% in November, down from a 4.2% gain in October. 

     Meanwhile, UK house price inflation receded in October, with prices 

rising by just 4.5% from a downwardly-revised 4.8% in September. That's 

the slowest pace of increase since a 3.7% increase in March. 

     For the third straight month, London recorded the slowest growth in 

the country, with prices rising by just 2.1%, down from 2.9% in 

September and the slowest pace of increase since March. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]