Unexpected UK inflation rates continued to show an increase in January which will certainly increase the pressure on the Bank of England (BOE) to raise interest rates more aggressively next month.
Data from the Office for National Statistics (ONS) shows that the UK consumer price index (CPI) rose to its most recent 30 -year high of 5.5%. This figure exceeded expectations to remain unchanged from the previous month’s reading, 5.4%.
The surge in higher energy prices has been a major contributor to the rise in UK inflation so far, although the problem of global chain disruption has also boosted the prices of other goods.
Meanwhile, core inflation (excluding food and energy prices) rose to 4.4% from 4.2% in the previous month, and also exceeded market projections for an increase of 4.3%.
UK inflation has soared high from a level of just 0.4% a year ago and prompted the BOE to raise its interest rates twice since the pandemic began.
This latest note is seen to continue to move the BOE to act more aggressively against inflation. Investors are now looking at a 50 basis point upside opportunity at next month’s policy meeting.
