UK inflation jumped by more than expected to go back above the Bank of England’s 2% target last month and measures of underlying price growth gathered speed too, showing why the BoE is moving cautiously on interest rate cuts.

Consumer prices rose by an annual 2.3% in October after showing a 1.7% increase in September which was the first time inflation fell below the BoE’s target in almost three and a half years.
The BoE’s most recent forecast and a Reuters poll of economists had both pointed to a reading of 2.2% in October.

The increase was the biggest month-to-month rise in the annual CPI rate since October 2022.
Services inflation – which the BoE views as a key measure of domestically generated price pressure – rose to 5.0% in October from 4.9% in September, the Office for National Statistics said.
The BoE had expected it to rise to 5.0% in October.

Core inflation, which excludes energy, food, alcohol and tobacco, picked up to 3.3% from 3.2% in September.