According to the report from the Office for National Statistics (ONS), in October consumer prices rose by 2.3% per year after an increase of 1.7% per year in September. As a result, inflation reached its highest level since April. Economists expected prices to rise by 2.2%. On a monthly basis, the consumer price index rose 0.6% (the strongest increase since March) after remaining unchanged in September. Consensus estimates suggested an increase of 0.5%.
The ONS said that the largest upward contribution to the CPI annual rates came from housing and household services, mainly because of electricity and gas prices. The largest offsetting downward contribution came from recreation and culture.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - accelerated to 3.3% per annum from 3.2% per annum in September (the lowest value since September 2021). Consensus estimates suggested an increase by 3.1% per annum. The CPI services annual rate increased further (5.0% compared to 4.9% in September), while the CPI goods annual rate declined much slower (-0.3% compared to -1.4%). Stubborn services price growth has been in focus in recent months.
On a monthly basis, core consumer prices rose by 0.4%, compared with the 0.1% increase in September. Economists had expected an increase of 0.3%. It was the 9th monthly increase in a row.
Overall, the latest data keeps the Bank of England on course for a cautious approach to reversing the 14 back-to-back interest rate hikes amid growing inflationary threats at home and abroad. Central Bank policymakers cut rates for only the second time earlier this month, and signaled a “gradual” approach to future reductions.