LONDON (AFP) — Elevated energy costs kept British inflation at an annual rate of 2.1 percent in November, official data showed Tuesday, but analysts still forecast more interest-rate cutting by the Bank of England.
The 12-month inflation rate, unchanged from October, remained above the Bank of England's 2.0 percent target, as motor and heating fuel costs rose, the Office for National Statistics (ONS) said in a statement.
Analyst forecasts were for inflation of 2.2 percent.
"November's lower than-expected inflation data keeps the door open for another (British) interest rate cut early in 2008," Global Insight analyst Howard Archer said.
The Bank of England earlier this month trimmed British interest rates for the first time since August 2005 in a bid to combat slower economic growth hit by an ongoing global credit squeeze.
The BoE cut its key rate by a quarter of a percentage point to 5.50 percent on December 6.
Archer said he expected the Bank of England to have slashed the cost of borrowing to 5.00 percent by May 2008.
"Furthermore, it is highly possible that interest rates could move below 5.00 percent in the second half of 2008," he added.
The ONS added Tuesday that on a monthly basis, Britain's consumer price index inflation rose 0.3 percent in November after an increase of 0.5 percent in October. The November figure was in-line with analyst expectations.
Capital Economics analyst Jonathan Loynes said that overall November's inflation figures would not prevent the BoE from "cutting interest rates further."
The Bank of England is tasked with keeping British inflation at an annual rate of about 2.0 percent.
- Office for National Statistics website: http://www.statistics.gov.uk/cci/nugget.asp?id=19
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