British inflation hits 10-year high, bolstering rate hike bets

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FILE PHOTO: People shop at market stalls along the skyscrapers of the City of London financial district, amid the coronavirus disease (COVID-19) pandemic, in London, Britain January 15, 2021. Businesshala / Toby Melville / FILE PHOTO
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LONDON (Businesshala) – British inflation hit a 10-year high last month, prompting hopes the Bank of England will raise interest rates next month, data showed on Wednesday.

Consumer prices rose 4.2 per cent year-on-year in October, faster than the 3.1 per cent growth in September. Both the BoE and Businesshala surveys of economists – neither of whom had predicted such a big increase – had pointed to a reading of 3.9%.

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“The main upward pressure came from electricity, gas and other fuels,” the Office for National Statistics said.

The BoE is expected to become the first of the world’s major central banks as the coronavirus pandemic batters the global economy, with investors and economists increasingly predicting this will happen on December 16.

On Monday, BoE Governor Andrew Bailey said he was “very uneasy” about the inflation outlook and his vote earlier this month to keep rates, which rattled financial markets, was a very close call.

On Tuesday, data suggested Britain’s labor market was facing the end of the government’s job-protecting furlough scheme, a major factor for the BoE and its decision on rates.

Reporting by Andy Bruce Editing by William Schomberg

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