UK Inflation Rate Raises to 2.3
The UK’s inflation rate has taken an unexpected turn, rising to 2.3% in October, surpassing economists’ forecasts of 2.2% ¹. This uptick, driven primarily by increased energy bills, marks the first rise in the consumer prices index (CPI) in three months. The energy price cap has led to a £12 monthly increase in typical annual household gas and electricity bills.
Although this rate is significantly lower than the 11.1% peak in 2022, concerns linger about the impact of Labour’s budget on inflation. The government’s fiscal stimulus, through increased spending, and the rise in employers’ national insurance contributions may lead to higher prices, causing inflation jitters ¹.
The likelihood of an interest rate cut in December has decreased, with market expectations now indicating an 84% chance of no change. Core inflation has risen to 3.3%, exceeding expectations, while services inflation has reached 5%, further complicating the interest rate decision.
The political reaction is mixed, with Chief Secretary to the Treasury Darren Jones acknowledging the struggles of British families and emphasizing the government’s focus on economic growth and investment. In contrast, Shadow Chancellor Mel Stride criticizes Labour’s budget, citing its potential to increase inflation and mortgage rates.
Key Inflation Figures:
– _CPI Rate:_ 2.3% in October, up from 1.7% the previous month
– _Core Inflation:_ 3.3%, exceeding expectations
– _Services Inflation:_ 5%, higher than forecast
– _Energy Price Cap:_ £12 monthly increase in typical annual household bills
*Interest Rate Implications:*
– 84% chance of no interest rate cut in December
– Market expectations shifted after inflation data release
– Interest rate decision complicated by rising inflation rates
Referenece and Citations:
- Stvnews – inflation jumps to 2 3 in sharpest increase for two years
- Yahoonews – inflation rise october higher energy bills
- Skynews – inflation has risen by more than expected official figures show