Inflation in the United Kingdom (U.K.) rose an annualized 2.3% in October, more than had been expected among economists and market analysts.
The British Office for National Statistics said the October increase in consumer prices was up significantly from a 1.7% annualized rise in September.
Economists polled by the Reuters news agency had forecast a 2.2% rise in October inflation.
The hotter-than-expected increase in consumer prices puts inflation back above the Bank of England’s 2% target and dampens expectations for a December interest rate cut.
Core inflation, which excludes volatile energy, food, alcohol and tobacco prices, rose 3.3% year-over-year in October, up slightly from 3.2% in September.
The growth in core inflation was due largely to regulator-set energy price caps that took effect in October, which are expected to cause higher energy prices during the cold winter months.
The Bank of England’s next interest rate decision is scheduled for Dec. 19. The central bank lowered interest rates by 25-basis points earlier in November.
Futures traders are now pricing in a 14% chance of a further interest rate cut by the Bank of England by year’s end.
