UK inflation rate rises for second month in a row
Published On Dec 18, 2024, 2:00 AM
The UK inflation rate has increased to 2.6% for November, marking the highest level in eight months. Main contributors to this rise were fuel and clothing prices, along with higher ticket prices for entertainment. Analysts believe this will influence the Bank of England to maintain current interest rates, which could be detrimental to households facing cost-of-living issues. Despite the increase, inflation remains below its late 2022 peak. Forecasts suggest inflation could stabilize around the Bank's 2% target by the end of next year, although there are concerns about ongoing pressures related to wage increases and housing costs.
Stock Forecasts
XLF
Positive
Given the ongoing inflation and the likely decision by the Bank of England to keep interest rates stable, financial stocks, particularly those related to mortgages and loans, may benefit from maintaining their current rate environment. However, consumer discretionary sectors such as retail could face headwinds due to less consumer spending power.
XLY
Negative
With heightened inflation, consumer goods companies may struggle as costs increase and consumer sentiment weakens. This could reflect negatively on stocks within this sector as well as ETFs focused on consumer discretionary goods.
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