UK Inflation Jumps To 2.3%, Underscoring BoE's Stance for Gradual Rate Cuts

 

• British inflation jumped by more than expected last month to rise back above the Bank of England's 2.0% target. Underlying price growth gathered speed too, showing why the BoE is moving cautiously on interest rate cuts.
• Consumer prices rose by an annual 2.3% in October, pushed up almost entirely by an increase in regulated domestic energy tariffs, after a 1.7% rise in September which was the first time the inflation rate had fallen below the BoE's target since 2021.
• The British Pound Sterling strengthened by almost a third of a cent against the U.S. dollar after the data was published before losing most of those gains. Interest rate futures priced at a slightly slower pace of rate cuts and bond prices fell. The BoE's most recent forecast and a Reuters poll of economists both pointed to a weaker CPI reading of 2.2%.
• James Smith, research director at the Resolution Foundation think tank, said a rise had been expected as last year's energy price falls dropped out of the annual calculation and the price cap increased in October.

(Source: Reuters)