A sharp rise in petrol and food prices drove inflation back above the Bank of England’s target in October, confirming the power of commodities to complicate the economic outlook and muddy the waters on interest rates. Financial Times, The Guardian, Daily Telegraph
In October, the annual rate of consumer price inflation stood at 2.1%, up from 1.8% in September and higher than both the analysts’ consensus forecast of 1.9% and the Bank’s 2% inflation target.
Higher petrol prices accounted for almost all of the acceleration in prices. A 2p tax rise and higher oil prices pushed the average price of a litre of unleaded up 2.7p last month compared with a 5.2p fall in the same month last year – fuel prices for road users rose 12.1% year on year.
Sharply higher meat prices also contributed to the rise in inflation, but this was offset by lower gas and electricity prices.