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17 Nov 2021
UK Inflation Surges to 10-Year High, Rate Hikes Could be Next
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Inflation rate in the U.K has reached a record high last month as energy and food prices soar. Expectations of interest rate hike by the Bank of England are taking over the market sentiment.
According to an economist poll by the BoE and Reuters, a forecast of 3.9% inflation was put forward. However, reports show that consumer prices went up by a staggering 4.2% in the month of October from 3.1%. Yael Selfin chief economist at KPMG UK said, “Today’s inflation data will reinforce the Bank of England’s resolve to act.”
Rishi Sunak, finance minister of the country insisted inflation was not just prevalent in the UK, but is a global problem. He further said the government was doing everything in its power to offset inflation. The office for National Statistics saw energy prices leading high inflation as consumers paid 28.1% more this year. The high wholesale prices of gas and energy have pushed energy suppliers to raise price, many companies were even forced to shut down due to high tariffs.
Economists and policymakers are expected the Bank of England to raise interest rates for the first time since the pandemic. However, BoE governor Andrew Bailey has said he will vote to leave interest rate unchanged for now. Robert Alster, chief investment officer at Close Brothers Asset Management said, “Ultimately, the impact of rising inflation on consumer spending and confidence will be a critical measure of stability, and determine how hawkish the Bank needs to be. We may well see the rate kicked into 2022.”