UK inflation spikes to ten year high on energy costs

UK inflation spikes to ten year high on energy costs

LONDON: British inflation spiked close to a ten-year high in October on increased energy bills and resurgent post-lockdown demand, data showed Wednesday, sparking talk of a pre-Christmas interest rate hike. The annual rate jumped to 4.2 percent, the highest level since November 2011, the Office for National Statistics said.

That followed 3.1 percent in September and was more than double the Bank of England’s 2.0-percent target. In reaction, the pound jumped against the euro and dollar as traders priced in a December interest rate hike from the BoE. The data “now makes it odds-on that all the pre-Christmas headlines will be of the Bank of England steals Christmas variety, if they do bite the bullet and belatedly nudge rates higher”, said CMC Markets analyst Michael Hewson.

‘Odds on’ rate hike

Rising consumer prices ramp up the cost of living, especially when wages fail to keep pace. The data “makes for uncomfortable reading and goes to show the punishing effects of higher energy and food prices on family finances,” said Russ Mould, investment director at AJ Bell. “It almost certainly means the Bank of England will raise interest rates soon, potentially as soon as next month,” he added. Inflation leapt on higher prices for