UK Inflation Surpasses Expectations, Remains Unchanged
According to recent data released by the Office for National Statistics (ONS), inflation in the United Kingdom showed no signs of easing during the month of September.
The preceding month’s Consumer Price Index (CPI) remained firm at 6.7%, mirroring the August figure. This persistence of inflation can be attributed to a rise in oil prices, which counteracted the decline in food prices, stabilizing the inflation rate. Notably, economic experts had initially anticipated a slight drop to 6.6% in the inflation rate.
Core inflation, which excludes the volatile elements of food, energy, alcohol, and tobacco, experienced a minor decrease from 6.2% in August to 6.1% in September.
In contrast, the Chancellor of the Exchequer in the UK, Jeremy Hunt, is of the view that inflation is on a declining trajectory in the long run. He stated, “As we’ve seen in other G7 nations, inflation rarely follows a linear path, but if we adhere to our strategy, we still anticipate a decrease throughout the year.”
It’s important to note that the CPI in the UK had reached an impressive 11.1% in October 2022, primarily driven by surging energy prices in Europe due to the Russian invasion of Ukraine.
The current inflation rate in the UK is substantially above the Bank of England’s target of 2%. Traders anticipate that interest rates will remain steady at 5.25%, although an additional interest rate increase is possible in early 2024.
In September, officials from the Monetary Policy Committee voted against raising interest rates, marking the first such decision since November 2021. Nevertheless, experts anticipate that interest rates will remain relatively high for an extended duration.
Marcus Brookes, the chief investment officer at Quilter Investors, noted, “For the time being, the prevailing narrative suggests that interest rates will remain at higher levels for an extended duration.”