UK inflation surges to a 10-year high of 4.2%, worse than expected

Business
  • The U.K.'s Consumer Prices Index rose by 4.2% in the 12 months to October 2021, up from 3.1% in September.
  • Economists polled by Reuters had a expected a figure of 3.9%.
  • The Bank of England held interest rates steady earlier this month, defying many investors' expectations that it would become the first major central bank to hike rates following the coronavirus pandemic.

LONDON — The cost of living in the U.K. surged in October to a 10-year high, with the figure now more than double the target set by the Bank of England.

The U.K.'s Consumer Prices Index rose by 4.2% in the 12 months to October 2021, up from 3.1% in September. Economists polled by Reuters had a expected a figure of 3.9% for October.

The Bank of England held interest rates steady earlier this month, defying many investors' expectations that it would become the first major central bank to hike rates following the coronavirus pandemic.

The Bank has been monitoring a confluence of crucial data points as inflation remains persistently high while economic growth moderates and labor conditions tighten. Wednesday's data will surely add more pressure on the Bank to act at its December meeting.

The Bank of England expects inflation to rise further to around 5% in the spring of 2022 before falling back toward its 2% target by late 2023, as the impact of higher oil and gas prices fades and demand for goods moderates.

Euro zone

Euro zone inflation hit a new 13-year high in October, at 4.1%, as the currency bloc battles surging energy costs.

This was the highest level since July 2008, according to Reuters data, and was ahead of a consensus forecast of 3.7%. September's figure had come in at 3.4%.

—CNBC's Elliot Smith contributed to this article.

Correction: An earlier version of this story misstated how the October figure compared with historical data.

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