Pressure to delay rate cut grows as inflation increases to 2.3%

Inflation could rise above 3% next year after it increased to 2.3% in October, heaping pressure on the Bank of England to delay further interest rate cuts until next spring.

- Phillip Inman

Figures released by the Office for National Statistics (ONS) yesterday showed that a rise in energy bills pushed up the consumer prices index (CPI), reversing a downward trend this year in inflation, which was 1.7% in September.

The figure for the year to October was slightly above the 2.2% that City economists had expected.

The ONS said higher gas and electricity prices were offset by lower oil prices, which reduced the transport and raw materials costs of manufacturing businesses. Falls in the price of theatre and live music tickets also helped to limit the fastest month-on-month increase in prices since October 2022, at 0.6%.

The quarterly energy price cap rose by 10% to £1,717 in October, and the cap is forecast to rise again in January, to put annual bills at £1,736.

Retailers have said that measures announced in Labour's budget last month will ultimately lead to higher prices, and the tax rises have already hit consumer confidence.