Inflation rises to 2.6% – consumer credit industry reaction

The Office for National Statistics (ONS) has published its latest Consumer Prices Index, which shows the rate of inflation rose to 2.6 per cent in the 12 months to November.

The announcement means that the inflation rate has increased for the second month in a row, rising at the fastest rate since March. Fuel and clothing were among the main drivers behind the rise. Increasing ticket prices for gigs and plays were also a factor.

Neil Rudge, Chief Banking Officer, Commercial at Shawbrook, said “Inflation continues to put a strain on SMEs, especially with elevated input costs and uncertain demand. The journey back to the Bank of England’s 2% target has been arduous, with businesses weathering persistent challenges along the way. Forecasts for 2025 offer some reassurance, with inflation expected to gradually ease, supported by stabilising energy costs and slowing price growth across supply chains. However, SMEs remain concerned about interest rates, which are predicted to come down only modestly in the short term. Lenders will need to remain committed to offering tailored and flexible financial support to help them overcome hurdles and seize opportunities, even in these testing times.”

Paul Noble, CEO of Chetwood Bank, said “This latest rise in inflation is a financial gut punch for Britons preparing for the year’s most expensive season. It comes as no surprise following the uncertainty surrounding October’s budget announcement and could be a sign of a prolonged period of inflation above the government’s target. All eyes will now be on the Bank of England’s interest rate announcement on Thursday to see how they react to this news.”

“With inflationary pressure still unrelenting, consumers must be more proactive than ever about managing their money – missing out on competitive rates and leaving funds in old savings accounts, or their current account, is just leaving money on the table. Financial institutions must play their part by providing products and support that can help Britons navigate yet another tricky economic period.”

Simon Webb, Managing Director of capital markets and finance at LiveMore said “Inflation has crept up from 1.7% in September to 2.3% in October and reached 2.6% in November. This latest rise in inflation isn’t surprising, bearing in mind financial market reactions to the Autumn Budget and the hike in energy bills.

“It’s not great news for consumers still straining to make payments. This financial climate can be particularly challenging for borrowers aged 50 to 90 plus. Mid-life borrowers are struggling to get on the housing ladder, while borrowers who have come to the end of their interest-only term and can’t pay off the capital, mistakenly believe themselves to be trapped on their lenders’ standard variable rates. Many aren’t mortgage prisoners at all but are eligible for affordable specialist and mainstream loans aimed specifically at these age groups.

“These latest inflation figures will probably reinforce predictions that the Bank of England will skip a December cut in the Bank Rate.”

Alastair Douglas, TotallyMoney CEO said “Above-target inflation doesn’t seem to be going anywhere for now, and expectations are that the cost of living could keep rising well into the new year.

“And although yesterday’s figures show that wages are going up, and hopefully helping people cope, the truth is that it’s mostly skilled workers reaping the rewards. The big worry is for those on inflation-linked benefits and tax credits, because they’ll see an increase of just 1.7% from April, meaning the gap will continue to grow.

“This all makes a possible rate cut at tomorrow’s Monetary Policy Committee meeting even more unlikely, as it’s clear the country is still struggling to control inflation. Long gone are the days when the former Prime Minister and the Bank of England were celebrating their hold on the cost of living before Christmas, and instead there’s the odd grumble and pointed finger.

“The only real chance they have of fixing inflation in the long term is by working together to develop a solid plan of action, factoring in their own data, forecasts, government support plans, and rate cuts.”