Rise in inflation could delay further interest rate cuts

Inflation rose to 2.3% last month, up from 1.7% in September.

Figures from the Office for National Statistics revealed that increasing energy bills pushed up prices for households across the UK.

The annual cost of gas and electricity for a typical household jumped by about £149 in October.

As a result, inflation is now back above the Bank of England’s 2% target, increasing pressure on the Bank to delay cutting interest rates again until the new year.

Earlier this month, the Bank cut interest rates from 5% to 4.75%. But experts predict the latest rise in inflation means further cuts are likely to be delayed until at least February 2025.

This line of thinking is backed up by comments from Bank governor Andrew Bailey who said interest rates would “continue to fall gradually from here” but wouldn’t be reduced “too quickly or by too much”.

What is inflation?

Inflation is a measure of price rises for goods and services over time. For example, if a packet of pasta cost £1 a year ago and now it costs £1.10, annual pasta inflation is 10%.

How is inflation measured?

The Office for National Statistics measures inflation by tracking the prices of hundreds of everyday items in an imaginary shopping basket.

Each month’s inflation figure shows how much the price of this basket of goods has risen in the space of a year.

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