United Kingdom inflation rises to highest level in five years

No New Clues on UK Rate Rise From Bank of England's Carney

No New Clues on UK Rate Rise From Bank of England's Carney

He said he anticipates having to write a letter to the Treasury explaining why inflation has risen above 3%.

'Despite continued robust growth in employment there is no sign of second-round effects on to wages from higher recent inflation, ' he told MPs.

(Update:) Inflation has hit a five-year high of 3% and the question on everybody's lips is will the Bank of England raise interest rates next month?

"Life is getting much more expensive with an increase in the cost of food, fuel and a last-minute price spike in flights all contributing to the rise in inflation", said Maike Currie, investment director for personal investing at Fidelity International. In the face of high inflation we are still seeing little wage growth so the pressure is continuing to grow on United Kingdom households.

On a monthly basis, inflation climbed 0.3%, after climbing 0.6% in the previous month.

However, the impact of the lower exchange rate on inflation is set to ease as the annual change of prices due to the pound's decline drops out of the comparison.

Core inflation that excludes energy, food, alcoholic beverages and tobacco, held steady at 2.7 percent.

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Another report from ONS showed that output price inflation slowed slightly to 3.3 percent, as expected, from 3.4 percent in August.

Rising import costs deriving from the weak pound should prove temporary, but BoE officials are anxious Brexit has left the economy prone to more persistent price pressures.

Speaking in United Kingdom parliament, Carney said loss of value in pound since European Union (EU) referendum has caused inflation to increase, " infusion is potentially over 3 per cent of next months.

Economic theory suggests an increase in interest rates pushes inflation down because it increases the value of the income derived on sterling assets to overseas buyers, increasing demand for those assets, pushing the value of the currency upwards.

The UK Office for National Statistics has reported a surge in the nation's inflation rate amid ongoing Brexit talks with European Union to determine the terms of the country's exit from the bloc and a weak pound.

"Overall, today's data are consistent with our view that the Monetary Policy Committee will raise interest rates in November, but it won't be panicked into doing so by concerns about inflation".

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