Britain’s annual inflation rate steadied at a five-year high of 3.0 percent in October as rising food prices offset falling motor fuel costs, official data showed Tuesday.
The Consumer Prices Index 12-month rate was unchanged from the level in September, the Office for National Statistics said in a statement.
Analysts’ consensus forecast had been for a slight rise in CPI to 3.1 percent.
Inflation has soared this year as a Brexit-hit pound ramped up import costs, which led the Bank of England to raise its key interest rate for the first time in a decade at a meeting earlier this month.
The BoE tightened borrowing costs to 0.50 percent from a record-low of 0.25 percent, with Britain’s inflation far above the central bank’s 2.0-percent target rate.
Separately on Tuesday, data from research group Kantar showed that UK grocery price inflation for the quarter ending November 5 stood at 3.4 percent, the highest level in four years.
Further rate hike?
At three percent overall, “inflation looks like it has peaked and… the Bank of England will tread carefully”, ING bank economist James Smith said following Tuesday’s data, adding that another rate rise next year remained a possibility.
“Brexit negotiations will be a big determining factor and there are a lot of hurdles to overcome over the next few months,” he added.
British Prime Minister Theresa May begins a major parliamentary battle over Brexit on Tuesday.
MPs will have their first chance to scrutinise the EU Withdrawal Bill, which would formally end Britain’s membership of the European Union and transfer four decades of EU legislation into UK law.
Britain is on course to leave the bloc in March 2019.
Meanwhile following the latest inflation data, “there was a very slight initial drop in the value of sterling as markets anticipate that inflation may not peak beyond 3.0 percent and future interest rate rises may not therefore need to be imminent”, Richard Stone, chief executive at stockbrokers The Share Centre, said in a note to clients.
The absence of another rate rise in the coming months would ease the pressure on households, which are seeing wages growth failing to keep pace with high inflation.
Responding to Tuesday’s data and looking ahead to next week’s annual government budget, the head of Britain’s union umbrella group, said the Conservative administration of May “must stop turning a blind eye to Britain’s cost of living crisis”.
“Next week’s budget is a chance to give five million public sector workers the pay rise they are long overdue,” said TUC General Secretary Frances O’Grady.