UK inflation rose to 2.3% in October, reversing a downward trend from earlier in the year and putting pressure on the Bank of England to delay further interest rate cuts until at least next year. Official data released on Wednesday by the Office for National Statistics (ONS) showed that a sharp increase in energy bills contributed significantly to the rise in the consumer price index (CPI), pushing inflation above of the Bank’s 2% target.
The figure marks an increase from 1.7% in September and is slightly higher than the 2.2% expected by economists. Increases in energy prices, particularly gas and electricity bills, were the main factors behind the increase, although falling oil prices helped offset some of the pressure on transportation and of raw materials for manufacturing companies. The 0.6% increase from September to October was the largest month-over-month increase since October 2022.
The quarterly energy price cap for households rose 10% to £1,717 in October, with forecasts calling for another rise to £1,736 in January 2025. Retailers have warned that measures introduced in Labour’s recent budget could push prices even higher, contributing to a drop in costs. consumer confidence.
Economists have expressed concern about rising inflation, which they say is partly due to rising energy bills and global trade frictions. Suren Thiru, economic director at the Institute of Chartered Accountants in England and Wales, called it a “disappointing recovery in inflation”, stressing that energy costs, budget impacts and global uncertainties will likely keep inflation above the Bank’s target for the foreseeable future. the near future.
The rise in inflation comes as the Bank of England has already cut interest rates twice this year, with the current rate at 4.75%.
Further complicating the Bank’s policy decisions, core inflation, which excludes volatile items such as food and fuel, also increased from 3.2% to 3.3%, while services inflation increased from 4.9% to 5%.
The pound reacted positively to the higher inflation data, rallying strongly against most currencies.