The rate of inflation, accelerated in October, beating a new four-decade high as steep rises in energy and food prices drove up Brits’ cost of living.
Consumer prices were up 11.1% on the level a year ago — the highest rate of inflation since October 1981 Office of National Statistics said Wednesday. It also on September a 10.1% inflation image and above the 10.7% projection in a Reuters poll of economists.
The Energy costs were the big driver in pushing up inflation last month, the ONS said. It reported the rate would have leaped to 13.8% if the government had not capped household power bills at 2,500 pounds ($2,967) from October 1.
As an indicative estimate, without the implementation of the EPG, electricity, gas other fuels prices would have risen by nearly 75% between September and October 2022, the ONS said.
Food costs allowed power the sharp run-up, with food price inflation hitting a 45-year high of 16.5%the official data showed.
In November, the Bank of England walked interest rates by 75 basis points for the first time in over three decades to try to cool red-hot inflation rates. The central bank has raised rates eight times since February to reach 3%, the highest level since the 2008 financial crisis.
Inflation is over five times the BoE’s 2% target and adds pressure on the central bank to increase welfare rates again in the December meeting, said Fiona Cincotta, senior financial markets analyst at City Index.
The market anticipates the BoE to raise rates by 50 basis points taking the benchmark rate to 3.5% she added.
Jeremy Hunt, the UK finance minister, has flagged he will make spending cuts in a new government budget expected to announce Thursday. That could help the BoE in its task, the Chancellor of the Exchequer presented.
This insidious tax is eating into pay cheques, household budgets, and saving while thwarting any chance of long-term economic growth, Hunt said, referring to the coronavirus pandemic and the fallout from the Russian war in Ukraine.
He added that help the Bank of England in its mission to return inflation to target by acting responsibly with the nation of finances.
That requires some hard but necessary findings on tax and spending to help balance the books.
London FTSE 100 stock index climbed 0.04% after the release of inflation data, while the British pound was up 0.15% at $1.1884 in choppy action.
At the time of the report, the GBP/USD pair is selling at 1.1923, opening price 0.5% above it, having set an intraday high of 1.1941 USD weakness amid persistent.
The UK. reported during European customs annual inflation, measured by the CPI, jumped to 11.1% in October, the most elevated rate since 1981. The reading reached above expectations of 10.7%. In the same period, the core inflation rate remained unchanged at 6.5% but above expectations of 6.4%.
After the data Bank of England Governor Andrew Bailey commented that the UK. Inflation reflects a series of supply shocks that could have been predicted shocks are finally starting to fade, and inflation in the UK. could peak around 11%.
Elsewhere, the US. Retail Sales came in better than expected, as, in October, the total receipts of retail stores increased by 1.3% consensus of 1%. The retail sales during the same period, the control group was up 0.7%.
The greenback spites a short-lived intraday healing remains on the back foot as market participants continue to discount a less aggressive Fed in December.
The GBP/USD pair holds a positive bias from a technical perspective, but indicators are starting to lose traction on the daily chart. The RSI changes flat above its midline, while the MACD prints a lower green bar, revealing decreasing bullish impetus. On the upside, the GBP/USD pair could face opposition at the weekly highs around 1.2030 and the 200-day SMA at 1.2237.
On the downside, the 1.1750 zone and the 100-day SMA at 1.1650 stand as the support levels in a technical correction. The cable could expand its downfall to the 20-day SMA at the 1.1520 area.
Despite the opening of the government Energy Price Guarantee program, the Office for National Statistics said the largest upward assistance came from electricity, gas, and other fuels.
Indicative sported shopper price inflation estimates suggest that the CPI rate would have last been higher in October 1981 for the annual inflation rate, where the estimate was 11.2%, the ONS said.
The CPI rose 2% in October, every month matching the annual CPI inflation rate between July 2020 and 2021.
The cost of lodging and family benefits, which includes energy bills, rose by an all-time high of 11.7% to October 2022, in the 12 months from 9.3% in September 2022.
On average, in October 2022, households are paying 88.9% more for their electricity, gas, and other fuels than they were paying a year ago, ONS said.
