British inflation continued to rise in September, official data showed on Wednesday, fueling a cost-of-living crisis and fears that UK interest rates could remain high for the length.
The Consumer Prices Index was held at 6.7 percent last month, after slowing to the same level in August, the Office for National Statistics (ONS) said in a statement.
That beat market forecasts for a further 6.6 percent expansion, as lower food and beverage prices were offset by higher energy costs.
The gloomy news came a day after upbeat data showed UK wages growth ahead of expansion for the first time in two years.
Inflation fell from a 41-year high of 11.1 percent in October 2022, helped by a series of increases from the Bank of England (BoE).
Britain is still facing a cost-of-living crisis, rising to the highest level in the G7 group of wealthy nations, while Japan did not report September figures.
Grant Fitzner, the ONS’s chief economist, said the prices of food, non-drinks, household goods and flights all fell in September, but those were “removed”. falls due to rising prices for car fuel and hotel accommodation.
– ‘Lost in the plan’ –
Chancellor of the Exchequer Jeremy Hunt has insisted that UK inflation remains on a long-term downward trend.
“As we have seen in other G7 countries, inflation has not fallen in a straight line, but if we continue our plan then we expect it to continue to fall this year,” he said.
However, inflation is still running at more than three times the BoE’s rate of two percent despite the central bank’s rate hike starting at the end of 2021.
The BoE left its key rate unchanged at 5.25 percent last month, making it 14 straight hikes after inflation slowed in August from 6.8 percent in July.
Wednesday’s data fueled concerns that the central bank should be guarded, as oil prices rose again amid the Israel-Hamas conflict in the wealth-rich Middle East.
– ‘High altitude’ –
“Inflation continues to rise in the UK, adding fuel to fears that interest rates will remain at a high level,” said Susannah Streeter, head of finance and markets at stockbroker Hargreaves Lansdowne.
“A combination of concerns about a tense situation in the Middle East and concerns about high prices remain, which is causing concern for investors.”
Victoria Scholar, head of investment at Interactive Investor, said the BoE could be forced to hike again.
“Inflation is showing more than expected,” said Scholar.
“Further increases in oil prices could end the path of inflation down to normal levels and could start the way for a tightening of the currency.”
KPMG chief economist Yael Selfin has predicted that growth will slow with the threat of higher energy prices.
“Energy prices have re-emerged as a source of inflation. Oil prices have risen by more than 20 percent since June, while UK gas prices are the highest since February,” said and Selfin.
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