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Inflation in Great Britain – data for October 2021. The highest price increase in a decade

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UK inflation jumped to its highest level in 10 years. Prices rose by 4.2 percent in October. on an annual basis, compared with 3.1%. increase in September. The data surprised economists who expected inflation at 3.9%. Every year.

The rise in inflation in relation to September, although expected, is greater than analysts expected. This means that the annual rate is already twice as high as the inflation target of the Bank of England (BoE), which will further strengthen the pressure to raise interest rates.

Inflation in Great Britain. Energy prices up

The biggest contributor to the rise in inflation is rising energy prices, including a 12% increase since October. cap of the standard household tariff. Other drivers of inflation were increases in fuel prices, used cars, and food and hospitality services.

Inflation in the UK began to rise – as in many other countries – as covid restrictions were lifted. In March this year, it was only 0.7 percent. Both the Bank of England and the British Ministry of Finance forecast that inflation will continue to rise in the coming months – according to their forecasts, the peak will be in April next year, when it may reach 5%.

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Consequently, most analysts expect the BoE to raise its main interest rate at its December meeting, which has remained at a record low of 0.1% since the start of the pandemic. Already before the November meeting of the Monetary Policy Committee (MPC), there were strong speculations about this, but in the end it was kept at the current level.

The Bank of England has stressed several times this year that much of the mounting price pressure is due to “transitory” factors stemming from the reopening of economies around the world after the COVID-19 pandemic and, in particular, from rising energy costs, but after its November meeting the MPC made it clear that “in the coming months” will raise interest rates.

Main photo source: Shutterstock

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