Inflation rose to 5.1% in November, up from 4.2% the month before, according to new data from the Office for National Statistics.
This is the highest figure the Consumer Prices Index (CPI) has reached since September 2011 and far exceeds the Bank of England’s (BoE) annual target of 2% growth.
Transport was the biggest contributor to price rises in November as supply bottlenecks drove fuel prices to the highest on record, according to the ONS. A litre of petrol cost an average of 145.8p in November compared to 112.6p a year before.
Likewise, the increasing cost of energy was also a leading factor in November’s inflation spike as high demand on a limited power supply has forced suppliers to raise prices significantly.
Brent Crude has risen to $72.64 (£54.82) per barrel of oil, more than three times higher than its $21.44 nadir in March 2020.
With inflation rising steeply across the year, the BoE estimated that the CPI would not reach 5% until spring next year but even this new target has proven optimistic.
Pressure is mounting in the lead up to the Monetary Policy Committee’s (MPC) meeting on Thursday, where it will decide on whether there will be any changes to interest rates.
Introducing higher interest rates is likely to curb the rapid rise of inflation, but after an underwhelming GDP rise of 0.1% in October was announced last week, analysts believe the change will be delayed until February.
The spread of Omicron has led some to fear that even steeper rates of inflation are yet to come, particularly from the hospitality sector, which will be most impacted by ‘plan B’ restrictions.
Colin Dyer, client director at abrdn, said: “The spread of the Omicron variant is a new factor that rate-setters will need to carefully consider – particularly how it, and any further restrictions, will affect factors such as consumer demand, product supply and energy costs, all of which will have an impact on whether prices rise or fall.”