LONDON (Reuters) - British inflation hit its highest level in eight months in November but an underlying measure of price growth closely watched by the Bank of England held steady, offering little relief to the central bank.
Consumer prices rose 2.6% year-on-year in November, ahead of a 2.3% rise in October and a 1.7% rise in September - the first time in nearly three and a half years that inflation fell below the BoE's 2% target.
Inflation was the highest since March and in line with economists' expectations in a Reuters poll.
The rate increase was broad-based but most prominent for transportation - particularly the cost of petrol and car purchases - and was partially offset by small increases in airfare and the cost of eating out.
Martin Sartorius, chief economist at the Confederation of British Industry, said: "Another steady monthly rise in inflation, reaching its highest level since March, reflects continued price pressures in the UK economy."
The BoE is concerned about continued strong wage growth while the new government's tax hike for employers is expected to filter into higher prices after it is introduced in April.
Some economists predict that headline consumer price inflation is likely to reach 3% in 2025.
The BoE - which is expected to keep interest rates on hold on Thursday after its December meeting - predicted that consumer price inflation would be 2.4% in November when it published a set of estimates six weeks ago.
Services inflation - which the BoE sees as a key measure of domestically generated price pressures - was unchanged from October at 5.0% in November, the Office for National Statistics said.
Economists polled by Reuters had expected a modest increase in most services price inflation to 5.1%. The BoE had expected it to fall to 4.9% in November.
The BoE has said it will proceed slowly with interest rate cuts despite signs that Britain's economy is losing momentum.
Sterling fell briefly against the dollar after the data was published.
The ONS said its measure of core inflation, which includes energy, food, alcohol and tobacco, rose to 3.5% in November from 3.3% in October.