Inflation in the UK reached its highest level in nearly a decade in October, after energy prices weighed heavily on British households.
The Consumer Price Index rose 4.2% in the last 12 months, the largest increase since November 2011 and 3.1% in September, the National Statistics Office said on Wednesday.
Inflation has more than doubled to the Bank of England’s target of 2% in 12 months, raising the chances of the Monetary Commission raising interest rates now. The British central bank has already signaled that it can take action. Currently the UK base interest rate is 0.1% per annum.
The biggest contributor to high inflation was the increase in energy costs, which included the total cost of natural gas, which shut down nearly two dozen energy suppliers and difficult industrial supplies.
Other major contributors to higher inflation were gas prices, hotels and restaurants, the statistics agency said. According to the Bank of England, inflation in the Northern Hemisphere is expected to reach 5% in the spring. “This period of high inflation will be temporary,” said Andrew Bailey, the central bank’s governor (director) this month. But he said there was “no fixed unit of time” to define the length of this intermediate period.
The central bank said raising interest rates would be “necessary in the coming months” if the economic data, as expected by the Monetary Commission, went ahead, especially if the government’s paid leave scheme to protect jobs during epidemics ends. Does not cause a large increase in unemployment.
In the first three months of September, the unemployment rate was 4.3%, 0.2 percent lower than in the first three months of July, and early wage data indicate that only a small number of people lost their jobs.
As the world economy emerged from continuous isolation over the past year, raw material supply barriers, labor shortages and other problems have disrupted supply chains around the world.
Officials are now warning that supply crunch and higher prices will last longer than initially expected, and increasing pressure on central banks to act more aggressively and keep inflation out of hand.
In the United States, the consumer price index rose 6.2% in October, the fastest annual increase since 1990 and 4.1% last month in the eurozone, the fastest in 13 years. In China, wholesalers’ prices to manufacturers have seen the biggest increase in 26 years, amid commodity prices and energy shortages.
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