Rising energy bills and food prices pushed British inflation to a 41-year high, according to data released a day before Finance Minister Jeremy Hunt announced tax increases and spending cuts to rein in prices.
Consumer prices rose 11.1% in the 12 months to October, the biggest increase since October 1981, a big jump from 10.1% in September, the National Statistics Office said on Wednesday.
Economists surveyed by Reuters had forecast inflation to rise to 10.7%.
The office said inflation would have risen to about 13.8% in October had the government not taken steps to limit the price of household energy bills to an average of 2,500 pounds ($2,960) a year.
Hunt, who will draft a new budget Thursday, said in response to the data that “difficult but necessary” decisions must be made to tackle rising prices.
“It is our duty to assist the Bank of England in its mission to bring inflation back to target by acting responsibly with the country’s finances.”
Analysts said the jump put pressure on the central bank to continue raising interest rates.
“These numbers stand uncomfortably next to the message the Bank of England sends when it suggests only moderately higher interest rates will be needed to bring inflation back to its 2 percent target,” said Mike Bell, global market strategist at the Bank of England. JP Morgan Asset Management. “We’re not quite convinced.”
Bell predicted that the Bank of England would raise the rate currently to 4.5% from 3.0%, noting that inflationary pressures from Britain’s tight labor market were underestimated and workers would likely want higher wages to offset inflation.
source: Noticias
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.