Inflation rises for second consecutive month in November

Inflation is now at its highest level since March 2024.

The rate of UK inflation increased for the second month in a row, hitting 2.6% in November, the Office for National Statistics (ONS) announced today.

This comes after a dramatic increase from 1.7% to 2.3% in October.

With inflation moving even further away from its target of 2%, this latest announcement is likely to strengthen predictions that the Bank of England’s Monetary Policy Committee will decide to keep the base rate at 4.75% at its meeting tomorrow.

Inflation has generally been trending downwards for the majority of 2024, but it has increased over the past couple of months due to higher energy costs and other factors. And, after the changes introduced by the recent Autumn Budget, inflation is expected to remain at higher levels in 2025 than previously thought.

What’s behind the rise in inflation?

Higher clothing and transport costs, particularly fuel, were a major reason behind this increase to inflation. Although petrol and diesel prices are both lower than one year ago, they rose by 0.8 pence and 1.4 pence per litre respectively between October and November.

By contrast, the cost of air fares fell by 19.3% in the month to November, their largest November fall since records began in 2001.

Recreation and culture also contributed to the higher inflation figure, as prices in this sector rose by 3.6% in the year to November compared to 3.1% in October. Within this category, the cost of concert and theatre tickets saw a particularly notable rise.

How does this affect the savings market?

Top deals across the fixed market have experienced minor fluctuations since the previous inflation announcement, bringing some welcome stability. Meanwhile, a handful of new providers have entered the scene, which is positive news in terms of competition and for savers willing to switch to challenger banks, who will have their own pricing strategies.

Easy access rates were among those receiving the most notable cuts, seeing a 0.10% reduction, but this is unsurprising given last month’s cut to base rate; however, a slew of providers currently offer the top-paying rate. Savers would be wise to take advantage of a competitive savings market and seek the highest-paying deals.

Cash ISAs have seen a more mixed bag of activity, with most fixed rate deals pushing in the upward trend by 0.03%. Savers looking to maximise their tax-free investments may wish to consider locking in for the longer-term as the top five-year fixed rate ISA beats its one-year counterpart.

Additionally, this may benefit savers in the long-run as they can avoid the impacts of interest rate cuts and inflationary pressures for longer. Savers also have the option of opening multiple ISAs within the same tax year on the condition their overall annual ISA allowance is not breached.

Providers may be launching the final push towards meeting their end-of-year targets, so it is possible that further rate adjustments are yet to take place. Savers should avoid waiting to pull the trigger on any enticing deals until the new year to avoid disappointment. In any case, savers should consider their personal circumstances and the conditions of any account before opening but, if they are in doubt, seek advice.