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What happened to inflation?
The UK inflation rate rose for the second month in a row, with prices rising at their fastest pace since March.
The main measure of inflation – the extent to which prices have risen over the previous 12 months – rose to 2.6%.
This is well below its peak during the cost of living crisis. In 2022, inflation rose to 11.2% due to increased demand for oil and gas after the Covid pandemic, and energy prices rose again when Russia invaded the 'Ukraine.
But inflation had fallen to 1.7% in September this year – its lowest level in more than three years – but is rising again.
What has increased in price?
The National Statistics Office, which calculates the inflation rate, highlighted the rise in the price of petrol and diesel as one of the main reasons for the latest rise in inflation.
Tobacco products have increased after the Chancellor increased taxes on these products in the Budget. Clothing, shoes and electronic games also cost more.
But generally speaking, the price of services, such as theater and concert tickets, education and health, has increased faster than that of goods.
The cost of housing, including rent, which is calculated using a different headline figure, also rose sharply in the year to November, up 7.8%.
But the price of air transport experienced its biggest drop in November since the turn of the century.
Will prices continue to rise?
Prices almost always go up a little; an inflation rate of around 2% per year is considered healthy.
Anything much lower than this figure risks delaying purchases because they could become cheaper. A little inflation encourages you to buy sooner – and that stimulates economic growth.
But the Bank of England currently forecasts that inflation will rise slightly to 2.75% in the second half of next year before falling again.
The government's official forecasting body, the Office for Budget Responsibility, expects a similar increase. He said policies announced in the recent Budget – including businesses passing on the higher costs of increasing employers' national insurance and the minimum wage – would help drive up inflation.
Could there be another cost of living crisis?
No one is currently forecasting a new inflationary surge, but it is difficult to predict the future evolution of prices, taking into account all the factors that could influence them, from the trade policy of the new American president Donald Trump to the mood of the shoppers on the main streets.
On average, wages are now rising faster than prices, helping to ease the pressure, but of course prices for most products remain significantly higher than they were a few years ago.
Housing costs, whether rent or mortgages, are a major source of financial strain for many people.
Even if the inflation rate falls next year, that doesn't mean prices will fall. They will simply increase more slowly, leaving most things more expensive than before.
What does this mean for interest rates?
On Thursday, the Bank of England's interest rate-setting committee will meet to discuss whether to cut rates.
They are not expected to lower rates from their current level of 4.75%.
This is because higher interest rates help keep inflation in check by curbing borrowing and spending. If borrowing becomes cheaper, people will likely have more money to spend, which could cause prices to rise more quickly.
So the higher inflation figure, added to the announcement earlier this week that wages are rising faster than before, will have given them more reason to wait.
Investors are eyeing rate cuts for next year, but expect them to come more slowly than expected a few months ago.
