Region:
Europe
Category:
Economy

UK inflation leaps to 10-year high

  • UK inflation leaps to 10-year high, bolstering rate hike bets
    Consumer prices rose by 4.2% in annual terms in October, leaping from a 3.1% increase in September. Both the BoE and a Reuters poll of economists - none of whom had predicted such a big increase - had pointed to a reading of 3.9%. UK inflation leaps to 10-year high, bolstering rate hike bets
Region:
Europe
Category:
Economy
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Consumer prices rose by 4.2% in annual terms in October, leaping from a 3.1% increase in September. Both the BoE and a Reuters poll of economists - none of whom had predicted such a big increase - had pointed to a reading of 3.9%.

 

British inflation surged to a 10-year high last month as household energy bills rocketed, according to data on Wednesday that will bolster expectations that the Bank of England will raise interest rates next month.

Consumer prices rose by 4.2% in annual terms in October, leaping from a 3.1% increase in September. Both the BoE and a Reuters poll of economists - none of whom had predicted such a big increase - had pointed to a reading of 3.9%.

"Today's inflation data will reinforce the Bank of England's resolve to act," Yael  Selfin, chief economist at KPMG UK, said.

The pound climbed to a one-week high versus the U.S. dollar and a 21-month high against the euro after the data.

Finance minister Rishi Sunak said rising inflation was not just a British problem and the government was taking action to offset the hit to spending power, even as it scales back most of its coronavirus emergency support.

Britain's inflation rate puts it in the middle of the pack among G7 countries, with annual U.S. consumer price inflation now running north of 6%.

The Office for National Statistics said household energy bills were the biggest driver of inflation following the lifting of a regulatory cap on bills last month, with gas prices paid by consumers up 28.1% in the year to October.

British energy suppliers are grappling with soaring wholesale gas prices that have led to the collapse of a number of energy companies, forcing more than 2 million customers so far to switch providers - often on higher tariffs.