In October, inflation in the U.K. picked up pace once again, surpassing expectations—a worrying sign for the Bank of England and the country’s newly-formed Labour government.
Consumer prices increased by 0.6 percent over the month, pushing the annual inflation rate up to 2.3 percent. This marks a significant rise from September’s 1.7 percent, fueling new concerns over how quickly inflation can return to the medium-term target of 2.0 percent.
Last month, inflation had fallen below the 2.0 percent target for the first time in over three years, largely due to the easing impact of volatile energy prices on annual calculations. While analysts had predicted a rebound, they only anticipated a rise to 2.2 percent.
Additionally, inflation pressures persisted even when excluding energy prices. The “core inflation” measure, which also omits food prices, ticked up to 3.3 percent from 3.2 percent in September. Notably, services inflation—a key indicator for underlying and longer-term trends closely monitored by the Bank of England—increased to 5.0 percent from the previous 4.9 percent.
Initially, the pound rose on the news, but by 9:30 a.m. CET, it had returned to pre-announcement levels following the recalibrated figures from the Office for National Statistics.
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