UK Inflation October 2022

Inflation came in at 11.1% in October, up from 10.1% in September and above market expectations. The October result represented the highest rate of inflation since 1981. The reading was largely driven by higher regulated energy prices, with Ofgem’s energy price cap rising 25% from September to October.

Average annual inflation rose to 8.2% in October (September: 7.6%). Meanwhile, the core inflation rate held steady at 6.5%.

Finally, consumer prices increased by 1.97% in October compared to the previous month, up from their September rise of 0.50%. October’s jump marked the highest reading since April.

On the implications of the reading for monetary policy, analysts at Nomura said:

“The huge rise in CPI inflation and the strong momentum in core prices, along with the evidence […] For a tight labor market, supports our view that the Bank of England is making another bold move in December. We’re looking for a 75 basis point hike.”

FocusEconomics Consensus forecast committee members expect inflation to reach 6.6% in 2023, unchanged from last month’s forecast, and 2.5% in 2024.

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