U.K. inflation accelerated past a five-year high last month, the country's official statistics office said Tuesday, adding a further complication to the Bank of England's plans to control consumer price increases as the economy shows further signs of a sharp slowdown.
The Office for National Statistics said consumer prices rose at a 3% clip last month, the fastest since April 2012 and higher than the 2.9% rate recorded in August. So-called core inflation, which strips out volatile food and energy prices, was pegged at 2.7%, the ONS said. Both readings were largely in-line with analysts' expectations.
"Food prices and a range of transport costs helped to push up inflation in September. These effects were partly offset by clothing prices that rose less strongly than this time last year," the ONS said. "While oil and fuel costs continued to rise, overall, the rates of inflation for raw materials and goods leaving factories were little changed in September."
The pound extended its gains against the U.S. dollar to trade 0.2% higher at 1.3280 by 09:50 London time, but could move further when BoE Governor Mark Carney speaks to U.K. lawmakers on the government's Treasury Select Committee later this morning.
The BoE is widely expected to lift its key Bank Rate by 25 basis points on November 2 as it attempts to manage its price stability mandate of an inflation rate that sits at 2%. However, some analysts have argued that the economy isn't strong enough to weather a rate hike, particularly given its reliance on consumer spending.
Wage growth in the U.K. is running at a rate of around 2.1%, nearly a full percentage point below the average rate of inflation, putting a significant squeeze on the ability of consumers to withstand price increases across the board.
Evidence of that inability was offered earlier Tuesday by September data from the European Automobile Manufacturers' Association, which showed the sixth consecutive monthly decline for U.K. car sales.
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