UK inflation at 5-1/2-year high in September; rate hike on track
london — British inflation rose to its highest level in more than five years in September, official data showed on Tuesday, adding to the likelihood that the Bank of England will raise interest rates next month.
Consumer prices last month were 3 per cent higher than a year ago, the Office for National Statistics said, matching economists’ average expectation in a Reuters poll and marking the fastest rise since April 2012.
Rising inflation — driven largely by the pound’s fall since last year’s vote to leave the European Union — has squeezed household incomes, causing broader economic growth to slow.
Wages have failed to keep pace with the rising cost of living.
Nonetheless, last month the BoE said it expected to raise interest rates in the coming months if the economy and price pressures continued to strengthen.
“Today’s release has all but rubber stamped a rate hike from the central bank at their next meeting,” said David Cheetham, chief market analyst at retail forex broker XTB.
Core consumer price inflation — which strips out changes in the typically volatile prices of energy, food, alcohol and tobacco — was steady at 2.7 per cent, as expected in the Reuters poll.
The ONS also released figures for house prices in August, which showed an 5.0 per cent annual rise across the United Kingdom as a whole compared with a 4.5 per cent increase in July. Prices in London alone rose 2.6 per cent. — Reuters