UK: CPI readings a little firmer than expected - BBH

Research Team at BBH notes that the UK reported CPI readings a little firmer than expected as the year-over-year headline rate rose to 1.2%, the highest in two years. 

Key Quotes

“The core rate rose to 1.4% from 1.2%.  The decline in sterling is adding to the inflation pressures.  UK import prices rose almost 15% in the year through November, the quickest pace in five years.  ONS reported that clothing, motor fuels, and electronic equipment prices rose the most.”

“Output prices rose 2.3%, which is also a bit quicker than expected.  It is the strongest rise since April 2012.  Input prices fell 1.1% on the month, but the year-over-year pace quickened to 12.9% from a revised 12.4% (was 12.2%).  The Bank of England meets this week.  It is expected to tolerate upward pressure on prices, though its tolerance is not infinite.  Base effects and sterling may obfuscate the underlying signal until H2 17.”