UK inflation hits 10-year high

London: Inflation in the UK surged to a 10-year high last month as household energy bills rocketed, data showed Wednesday, bolstering expectations that the Bank of England (BoE) will raise interest rates next month.
Consumer prices rose by 4.2 percent in annual terms in October, leaping from a 3.1-percent 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 percent. “Today’s inflation data will reinforce the Bank of England’s resolve to act,” Yael  Selfin, chief economist at KPMG UK, said.
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 increasing by 28.1 percent in the year to October. “A substantial winter surge in inflation remains probable with the rising cost of imported raw materials and higher energy prices likely to lift inflation to around 5 percent next year,” said Suren Thiru, head of economics at the British Chambers of Commerce.
The BoE is expected to become the first of the world’s major central banks to raise rates since the coronavirus pandemic swept the global economy, with investors and economists increasingly predicting that will happen on December 16. On Monday, BoE Governor Andrew Bailey said he was “very uneasy” about the inflation outlook and that his vote to keep rates on hold earlier this month, which shocked financial markets, had been a very close one.On Tuesday, data suggested Britain’s labor market was withstanding the end of the government’s job-protecting furlough scheme, a key factor for the BoE and its decision on rates. There were signs in Wednesday’s data of further inflation pressure in the pipeline. Prices charged by factories rose by more than expected, up 8 percent compared with October 2020, the sharpest increase since 2011.
–The Daily Mail-CGTN
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