British inflation rose sharply in October, climbing to 2.3% from 1.7% in September, and surpassing the Bank of England’s 2% target for the first time in months. The unexpected jump was fueled by higher regulated domestic energy tariffs under Ofgem's revised price cap, reversing the recent relief from lower energy costs. Core inflation, which excludes volatile items like food and energy, edged up to 3.3%, signaling persistent underlying price pressures.
Services inflation, a key indicator of domestic price trends, hit 5.0%, reflecting the challenges the Bank of England faces in taming price growth. The central bank has been cautious about cutting interest rates, concerned that lingering inflationary pressures might undermine economic stability. Experts pointed to slowing wage growth and a cooling labor market as potential factors that could ease inflation in the coming months.
Government officials acknowledged the strain on households, with Chief Secretary to the Treasury Darren Jones emphasizing efforts to alleviate living costs. However, concerns remain that fiscal policies, including higher corporate taxes introduced by the new government, could stoke inflation further in 2025. Bank of England Governor Andrew Bailey warned that borrowing costs would only decrease gradually, as policymakers await clearer evidence of inflation’s trajectory.
