U.K. inflation held at a 5 1/2-year high in October, as cheaper auto fuel offset the rising cost of food.
Consumer prices rose 3 percent from a year earlier, the Office for National Statistics said Tuesday, though, economists had expected inflation to accelerate to 3.1 percent.
According to Bloomberg’s report, it means Bank of England Governor Mark Carney has been spared having to write to Chancellor of the Exchequer Philip Hammond explaining why inflation is more than a percentage point above the 2 percent target, though officials expect the rate to reach that level soon.
Policy makers raised their key interest rate to for the first time in more than a decade this month to tackle the rising cost of living.
The inflation pickup was driven by food prices, which rose 4.2 percent in the year through October, the most in four years. Food prices rose 0.6 percent on the month. The surge reflects rising import prices caused by the almost 12 percent drop in the pound since the Brexit referendum last year.
There was also upward pressure from electricity prices after Centrica Plc raised electricity tariffs by 12.5 percent.
Downward pressure came from cheaper gasoline prices, with the cost of auto fuel declining 0.4 percent on the month compared with a jump of 2.3 percent a year earlier.
The pound fell after the data, weakening 0.3 percent to $1.3081 as of 9:32 a.m. London time.
Inflation may be now close to a peak, with the central bank saying it predicts a slowdown in coming months and through 2018. That will be a relief for British consumers seeing their spending power squeezed as pay growth fails to keep pace.
Shrinking household spending power is being felt on the high street. October was the “most horrific” on record for retail sales, according to the BDO High Street Sales Tracker last week.
Sluggish wage growth alongside a downward trend in inflation makes further rate hikes in 2018 “unlikely,” according to Bloomberg Economics.
Core inflation — which excludes volatile food and energy prices — held at an annual rate of 2.7 percent in October.
Separate figures showed cost pressures are easing after pound stabilized earlier this year. Input prices for factories rose 4.6 percent on the year, the least since July 2016. Output prices increased 2.8 percent, the slowest pace since November last year. Growth in the price of imported materials slowed to 4 percent.
House-price growth accelerated to 5.4 percent in September from 4.8 percent in August.