U.K. inflation re-accelerated in October, and by more than expected, in a troubling development for the Bank of England and the new Labour government.
Consumer prices rose 0.6 percent on the month, taking the annual headline rate of inflation back up to 2.3 percent. That’s a sharp rise from 1.7 percent in September, and casts fresh doubt over how quickly it will return to its medium-term target of 2.0 percent.
Inflation had fallen below its target for the first time in over three years last month, largely due to volatility in energy prices passing out of the annual calculations. Analysts had expected a rebound, but only to 2.2 percent.
But even excluding energy prices, underlying inflation ticked up last month. The so-called “core measure”, which strips out food as well, rose to 3.3 percent from 3.2 percent in September. Services inflation, which the Bank has seen as a good guide to underlying and persistent trends, also increased to 5.0 percent from 4.9 percent.
The pound rose initially on the news, but by 9:30 a.m. CET had returned to where it was before the Office for National Statistics revised its figures.
