UK inflation rises more than expected amid higher energy bills

UK inflation jumped past the Bank of England’s target in October after energy bills rose, according to data released on Wednesday by the Office for National Statistics.

The consumer price index rose at an annual rate of 2.3% in October, up from 1.7% in September and above the 2.2% expected by economists.

This was also above the Bank of England’s 2% target, and was put down to higher electricity and gas prices.

Electricity prices rose by 7.7% in October, having fallen by 7.5% between the same two months last year. Meanwhile, gas prices were up 11.7%, having fallen by 7% last year.

The figures showed that services inflation ticked up to 5% in October from 4.9% the month before. However, it was down from 7.4% in July 2023, which was the joint highest rate - with May 2023 - since March 1992.

Core inflation, which strips out volatile elements such as food and energy, rose to 3.3% from 3.2%.

ONS chief economist Grant Fitzner said: "Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year."

Ruth Gregory, deputy chief UK economist at Capital Economist, said October’s "surprisingly large rebound" in CPI won’t stop the Bank of England from cutting interest rates further.

"But it lends some support our view that the Bank will skip the December meeting and cut rates only gradually, by 25 basis points in February and at every other policy meeting until rates reach 3.50% in early 2026," she added.