But prices rose across the board with second-hand cars among the biggest drivers of the inflation acceleration…reports Asian Lite News.
Inflation has hit a 10-year high as household energy bills rocket, bolstering expectations the Bank of England will raise interest rates in December just weeks after it rocked markets by keeping borrowing costs on hold.
Consumer prices rose by 4.2% in annual terms in October, leaping from a 3.1% increase in September, the Office for National Statistics said on Wednesday.
“Today’s inflation data will reinforce the Bank of England’s resolve to act,” Yael Selfin, chief economist at KPMG UK, told.
The pound climbed briefly to a one-week high versus the U.S. dollar and a 21-month high against the euro.
Finance minister Rishi Sunak said rising inflation was not just a British problem and the government was taking action to offset the hit to spending power, even as it scales back most of its coronavirus emergency support.
Britain’s inflation rate puts it in the middle of the pack among G7 countries, with annual U.S. consumer price inflation now running north of 6%.
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 up 28.1% in the year to October.
British energy suppliers are grappling with soaring wholesale gas prices that have led to the collapse of a number of energy companies, forcing more than 2 million customers so far to switch providers – often on higher tariffs.
But prices rose across the board with second-hand cars among the biggest drivers of the inflation acceleration.
The BoE – which has a target of 2% inflation – has said higher borrowing costs can do nothing to influence energy prices. But some of its policymakers are concerned that high inflation could harm its credibility in the eyes of the public.
Forecasts by the BoE show it expects inflation to hit around 5% in the coming months before falling back.
The BoE looks poised to become the first of the world’s major central banks to raise rates since the coronavirus pandemic swept the global economy. Investors and economists are increasingly predicting that will happen on Dec. 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 had been a very close call.