Inflation in the UK reaches 11-month high

According to data released by the Office for National Statistics (ONS) in the UK, consumer prices increased by 3.5 percent in the 12-month period up to September, reaching their highest level in 11 months.

According to data from the Office for National Statistics, the annual inflation rate rose from 3.1 percent in August to 3.5 percent in September. Exceeding economists' expectations of a 3.4 percent increase, the data was influenced by record diesel prices at the end of September and rising motor vehicle fuel prices. Services inflation, an indicator of domestic pressures, rose to 3.7 percent.

The price cap limiting household energy bills is set to rise in October, and the Bank of England (BOE) expects inflation to exceed 4 percent in early 2027, pointing to new financial challenges. Investors are pricing in that the BOE will raise interest rates for the first time since 2023 at its November 5 meeting and make three more rate hikes over the next 12 months. Central Bank Governor Andrew Bailey stated that as the energy shock and the Iran war prolong, it will become harder to avoid a rate hike, while developments also affect the plans of Chancellor of the Exchequer John Healey, who will announce his first budget next Wednesday.