The surprise fall in headline inflation back below the 2.0% target in November reflected steep price falls in a handful of components related to consumer goods, driven by Black Friday discounts, which should reverse this month. More concerningly, the above-target monthly rises in CPI-trim and CPI-median, which excluded those large movements, still suggest that underlying inflationary pressures are building. While this at the margin raises the chance for a pause at the Bank’s next meeting in January, we continue to forecast a 25bp cut.
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