UK inflation surges to its fastest in more than nine years as consumer prices jump

LONDON. UK inflation surged more than expected to the strongest pace in more than nine years, prompting investors to anticipate a sharper increase in interest rates next year. Consumer prices jumped 3.2 per cent in August from a year ago, the most since March 2012, after dipping back to the central bank’s 2 per cent target the month before, the Office for National Statistics said yesterday. The reading was above the highest estimate in a Bloomberg survey.

The pound gained 0.1 per cent against the dollar to $1.3822, and money markets are now betting the Bank of England will raise the base rate to 0.5 per cent by the end of next year. The figures “will keep the Bank of England in a hawkish mood, laying the ground for a rate hike in the first half of next year,” said Dean Turner, economist at UBS Global Wealth Management.