Pumps are seen at a petrol station in south east London, Britain, Feb 2, 2023, REUTERS/May James/files
LONDON – British consumer price inflation (CPI) remained at an 18-month low of 6.7 percent in September, defying economists’ expectations for a further decrease and raising the possibility of interest rates rising.
Financial markets still anticipate the Bank of England to maintain interest rates at 5.25 percent on Nov. 2, after keeping them unchanged in September when the inflation rate unexpectedly dropped.
However, the release of Wednesday’s data from the Office for National Statistics caused the British pound to rise. The data indicated that the increase in fuel prices between August and September exerted upward pressure on the annual CPI rate, which economists had predicted would fall to 6.6 percent.
“Progress in reducing inflation is slow, with the UK experiencing higher levels of inflation compared to other major industrialized nations,” commented Ian Stewart, chief economist at Deloitte.
READ: UK inflation to be highest among big economies in 2023 – OECD
“The persistence of underlying inflation and service price pressures suggests that interest rates are likely to remain near current levels for much of next year,” he added.
Wednesday’s data revealed that core inflation, which excludes volatile food, energy, alcohol, and tobacco prices, declined less than anticipated to 6.1 percent in September from August’s 6.2 percent.
Service price inflation, another component of CPI studied by the Bank of England, increased to 6.9 percent in September from 6.8 percent.
In October 2022, British consumer price inflation reached a 41-year high of 11.1 percent following a surge in European energy prices due to Russia’s invasion of Ukraine. This added to the pressures caused by supply chain disruptions and labor shortages resulting from the COVID-19 pandemic.
In its August forecast, the Bank of England projected that inflation would remain above its 2 percent target until early 2025.
READ: Bank of England halts run of interest rate hikes as economy slows
The UK government is also closely monitoring inflation. Prime Minister Rishi Sunak pledged at the beginning of this year to halve inflation, and many households have experienced a decline in their standard of living as wages struggle to keep up with prices.
“As seen in other G7 countries, inflation rarely declines in a linear fashion, but if we stick to our plan, we still expect it to continue falling this year,” stated finance minister Jeremy Hunt after the release of the data.
British consumer price inflation remains the highest among the advanced nations in the Group of Seven, with France and Italy having the closest rates at 5.7 percent and 5.6 percent, respectively, for September.
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
