UK Inflation rebounds back into positive territory in November

CPI was unchanged on the month and increased by 0.1% in November. Movements in transport costs and alcohol and tobacco prices were the main contributors to the rise.

Core inflation, excluding energy and food prices, continued to increase somewhat to 1.2% y/y, from 1.1% the previous month. In line with expectations and supporting that the underlying inflation pressure is building up.

"Further tightening of the labour market is expected to put an upward pressure on wage growth. Thus, we expect inflation pressures to gradually build up onwards. Our forecast is that the BoE will start to hike rates in Q2 2016", says Nordea Bank.