With a day to go before the Bank of England’s inflation report investors were given cause for concern as the Office for National Statistics announced a 20-week inflation high.
This data came after an earlier report showed a 1.7 per cent increase in UK house prices for September.
In September annual consumer price inflation stood at 2.2 per cent, the lowest level seen since the end of 2009. In October this figure jumped up by 0.5 per cent to 2.7 per cent, the highest result since May.
Although the Bank of England had previously asserted that the run of declines would probably stall economists participating in a Bloomberg News survey still predicted inflation would only creep upwards slightly to 2.4 per cent, whilst other economists forecast an even smaller increase to 2.3 per cent.
The central bank maintains that inflation is unlikely to come in lower than its 2 per cent target until the last two quarters of next year.
Inflation is generally expected to rise over the next few months due to scheduled increases in gas and electricity prices.
Also today, the Office for National Statistics published a separate batch of figures which showed an annual rise of 0.1 per cent in input cost inflation, despite economists expecting a 0.5 per cent decline, and factory gate inflation holding its previous level of 2.5 per cent.
The main cause of October’s inflation jump was the vast increase in maximum university tuition fees. Formally, the most universities could annually charge for tuition was just under £3,500. Now universities can charge up to £9,000 a year. This leap in costs added 0.3 percentage points to the inflation rate.
Elevated food prices were also to blame for the five-month inflation high. Poor summer weather caused the prices of certain goods to increase, as did higher transportation costs.
As of 10:45
The Pound to Euro exchange rate is currently trading at 1.2531
The Pound to US Dollar exchange rate is currently trading at 1.5892
The Pound to Australian Dollar exchange rate is currently trading at 1.5252
The Euro to US Dollar exchange rate is currently trading at 1.2680
The Euro to Pound exchange rate is currently trading at 0.7978
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