Consumer price inflation accelerated in November, with the CPI increasing by 2.6 percent annually, up from 2.3 percent in October following a modest monthly rise of 0.1 percent, both gains in line with the consensus forecasts. The headline rate now stands at an 8-month high.

Transport emerged as the most significant contributor to but housing and household services added further upward pressure as did alcohol and tobacco and miscellaneous goods and services. Core CPI, which excludes volatile items like energy and food, increased from 3.3 percent to 3.5 percent while services were flat at 5.0 percent. A, at 0.4 percent, the goods rate moved back above zero for the first time since March.

These trends highlight persistent inflationary pressures across essential sectors, suggesting broader economic challenges in curbing price increases, particularly in the key services sector. As such, the data increase the likelihood of no change from the Bank of England tomorrow. Today's update takes the RPI to 1 and the RPI-P to minus 1, meaning that economic activity in general is performing much as forecast.

UK annual inflation is seen at 2.6 percent in November versus 2.3 percent in October. Month on month, the consensus looks for a gain of 0.1 percent after October's nasty 0.6 percent increase. For the core, forecasters see a troublesome 3.6 percent on year, up from 3.3 percent in October.

The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households in the UK. It is calculated using the same methodology developed by Eurostat, the European Union's statistical agency, for its harmonised index of consumer prices (HICP). The CPI is the Bank of England's target inflation measure.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as the UK, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. Inflation is an increase in the overall price level of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.

Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

For monetary policy, the Bank of England generally follows the annual change in the consumer price index which is calculated using the European Union's Eurostat methodology so that inflation can be compared across EU member states.