Key events
The stronger than expected inflation figures dampened hopes of imminent interest rate cuts from the Bank of England.
Luke Bartholomew, deputy chief economist at abrdn, said:
Headline inflation was always going to pop up again given energy price effects, but the slightly larger than expected increase reported today is somewhat disappointing. In particular, services inflation, which is closely watched by policymakers as a sign of underlying inflation pressures, was stronger and still well above an inflation-target consistent rate, albeit broadly in line with the Bank of England’s forecasts.
Headline inflation is likely to drift further above target for the next few months, but it is the fundamental determinants of inflation that will determine the path of interest rates from here. And with the budget set to boost growth and inflation next year, there is little reason for the Bank to deviate from its only gradual rate cutting schedule any time soon. So we continue to expect the next rate cut early next year.
Simon French, chief economist and head of research at investment bank Panmure Liberum, said on X:
Food price inflation edged higher to 1.9% from 1.8% in September, well down from the recent peak of 19.2% in March 2023, which was the highest annual ate for over 45 years.
Treasury chief secretary Darren Jones acknowledged there was “more to do” to ease cost-of-living pressure, as inflation increased to 2.3% in October from 1.7% in September.
Jones said:
We know that families across Britain are still struggling with the cost of living. That is why the budget last month focused on fixing the foundation of our economy so we can deliver change.
That includes boosting the national minimum wage, freezing fuel duty and protecting working people’s payslips from higher taxes. But we know there is more to do. That is why the government is focused on economic growth and investment so we can make every part of the country better off.
Introduction: UK inflation picks up to 2.3% after energy bills rise
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Inflation in the UK picked up more than expected last month because of higher electricity and gas prices.
The consumer prices index rose at an annual rate of 2.3% in October, up from 1.7% in September. Economists had expected a rate of 2.2%.
Electricity prices rose by 7.7% in October, having fallen by 7.5% last year. Gas prices increased by 11.7% in October, compared with a 7% drop last year.
The energy price cap went up, and Ofgem, the regulator, estimates that for an average household paying by direct debit for dual fuel, this equates to £1,717, a rise of £149 on an annual bill.
The Agenda
