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Inflation still on track

Inflation remains is still well within government targets, despite a larger than expected increase last month. The underlying rate of inflation rose to 2.2% in November, whilst most analysts had expected the figure to be slightly lower, at 2.1%.

The financial markets have recently been pricing in interest rate cuts of as much as half a percent, but with inflation creeping upwards towards 2.5% (the figure set by the government as a target for the Monetary Policy Committee), any short term cut in interest rates is by no means certain.