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Inflation in the UK rises to a 10-year high of 4.2%, worse than expected




People were seen eating outdoors in Soho, London in September 2021. Since the Covid restrictions were lifted in Britain, people have flocked back to streets, shops and public spaces.

SOPA pictures | LightRocket | Getty pictures

LONDON – The cost of living in the UK rose in October to a 1[ads1]0-year high, with more than double the target set by the Bank of England.

The UK’s consumer price index rose by 4.2% during the 12 months to October 2021, up from 3.1% in September. Economists polled by Reuters had an expected figure of 3.9% for October.

The Bank of England kept interest rates stable earlier this month, defying many investors’ expectations that it would be the first major central bank to raise interest rates following the coronavirus pandemic.

The bank has monitored a confluence of important data points as inflation remains persistently high while economic growth moderates and working conditions tighten. Wednesday’s data will definitely put more pressure on the bank to act at the December meeting.

The Bank of England expects inflation to rise further to around 5% in the spring of 2022 before falling back to the 2% target by the end of 2023, as the impact of higher oil and gas prices declines and demand for goods declines.

Samuel Tombs, the UK’s chief economist at Pantheon Macroeconomics, agreed that a “5% peak is ahead”.

“The jump in the headline interest rate in October, to the highest rate since December 2011, was primarily driven by the 12.2% increase in Ofgem’s standard price cap,” he said in a research note, referring to the increase in gas prices.

“In addition, motor fuel prices jumped by 3.0% month-on-month in October, but fell slightly a year ago, with the result that the contribution to the main interest rate increased by 0.1 percentage points. Inflation in food CPIs also rose to 1 .2%, from 0.8%, closing the gap with producer prices. ”

Eurozone

Eurozone inflation reached a new 13-year high in October, at 4.1%, as the currency bloc battles rising energy costs.

This was the highest level since July 2008, according to Reuters data, and was ahead of a consensus forecast of 3.7%. September’s figures had come in at 3.4%.

– CNBC’s Elliot Smith contributed to this article.

Correction: An earlier version of this story misinterpreted how the October figure compared to historical data.



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