UK inflation rate: How quickly are prices rising?

The Bank also considers other measures, external, such as “core inflation” when deciding whether and how to change rates.

Core inflation doesn’t include food or energy prices because they tend to be very volatile, so can be a better indication of longer term trends. The measure was 3.5% in November, up from 3.3% in the year to October.

In October, the Bank governor Andrew Bailey said it could be a “bit more aggressive” at cutting borrowing costs, if inflation remained under control.

However, after the Budget at the end of that month, the Bank predicted that the policies it contained – such as an increase in National Insurance Contributions paid by employers – would lift inflation slightly as businesses would pass on their increased costs through higher prices.

Announcing the November rate decision, Mr Bailey indicated any further cuts were likely to be gradual, adding: “We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much.”

In December the OECD think tank also predicted that rates would be higher for longer due to UK Budget measures.

The Bank is widely expected to hold rates at 4.75% at its next meeting on Thursday 19 December.