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GBP: UK households set to feel the effects of living cost increases

By Kiran Najran December 13th, 2017

The big talking point from yesterday was that UK consumer price inflation increased to 3.1% in November. Economists had been hoping that 3% was the ceiling and that inflation would come down, but yesterday put paid to that. For now at least. A report by the Office for National Statistics showed that the increase was largely down to a slower-than-expected decrease in air fares and an increase in computer games.

The worry is that as inflation continues to outpace wage growth, more and more UK households will feel a squeeze to living costs. While many do expect inflation to start falling in 2018, the dips are only expected to be gradual; if this affects consumer spending, then economic growth will also be affected. There is real potential for a domino effect over the coming months.

Today sees the release of the unemployment rate for October. It is expected to stay unchanged at 4.3% – the lowest mark since 1975. Average earnings will be released too and are expected to confirm that as inflation increased, wages stayed the same at 2.2% (excluding bonuses).

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