United Kingdom inflation rises to highest level in five years

United Kingdom inflation rises to highest level in five years

United Kingdom inflation rises to highest level in five years

He said it is more likely than not that he will write open letter to Chancellor Philip Hammond, explaining why inflation exceeded the target by one percentage point.

Bank of England Governor Mark Carney said on Tuesday the central bank still had to balance the need to support job creation and growth with an inflation rate that is running above its target. Higher food prices and recreational goods were the main factors in the cost of living increase, said the Office for National Statistics.

A reversal in the Bank's post-Brexit-vote, quarter percentage point cut in base rate looks nearly certain in November, particularly after news today that the consumer price index (CPI) rose at an annual rate of 3% in September.

"Today's release has all but rubber-stamped a rate hike from the central bank at their next meeting", said David Cheetham, chief market analyst at online trading firm XTB.

It's because of this above-target inflation that Carney and others on the bank's rate-setting panel are expected to raise the benchmark rate by a quarter point from the record low of 0.25 percent at the next policy meeting on November 2.

Inflation rate climbs to 3%.

'Inflation rising potentially above the 3% level in coming months is something that we have anticipated. In the meantime, underlying price pressures continued to be sticky, with the "core" rate, which strips energy, food, alcohol, and tobacco, stayed the same at 2.7 percent in September.

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The central bank's upcoming economic projections, released on November 2 alongside the rate decision, are set to show growth remaining weak and inflation edging lower.

Though the central bank's upcoming economic projections, released on the day of the next rate-setting meeting, are set to show growth remaining weak and inflation edging lower, many economists think the bank will raise interest rates to give itself room to cut them in the future should the Brexit discussions fail to make headway and the economic outlook darkens further.

"So my position now is that if the data out-turns are consistent with the picture I just described of an outward gap going towards zero, then I'd be minded to vote for a Bank Rate increase in the coming months".

BOE deputy Governor Dave Ramsden was answering United Kingdom lawmaker's questions in a parliamentary committee, alongside new external BOE policy setting member, Silvana Tenreyro.

The latest report is in line with the forecast issued by the BoE in August, when it said it expected CPI inflation to peak at 3% in October this year.

Ramsden cautioned that leaving the European Union is "a multi-dimensional process" and that the coming months are crucial ones for Brexit.

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