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UK inflation soars to 10-year high of 4.2%, making December interest rate rise ‘more likely’ – business live


Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Inflation in the UK has soared to a 10-year high as rising energy bills, fuel costs, second-hand car prices and food hit families and businesses.

Data just released shows that the Consumer Prices Index surged to 4.2% in the 12 months to October, more than double the Bank of England’s inflation target.

This is the highest 12-month inflation rate since November 2011, the Office for National Statistics reports.

That’s up from 3.1% in September, and higher than City economists had expected.

It means the cost of living squeeze has intensified as a tough winter approaches. And it puts more pressure on the Bank of England to consider raising interest rates next month.

Yuan Potts
(@YuanPotts)

UK consumer prices rose 4.2% year to October.
Faster inflation than any of the 35 economists expected in Bloomberg’s survey.


November 17, 2021

In October alone, prices rose by 1.1%.

The “main upward pressure came from electricity, gas and other fuels”, says the ONS, after the UK’s energy cap was lifted in October. That drove up household bills sharply, hitting vulnerable families hard.

The ONS says:


In April 2020, the energy price cap had been reduced causing electricity, gas and other fuels’ contribution to the CPIH headline rate to fall to negative 0.20 percentage points. But this fall was reversed in April 2021 with rises in gas and electricity prices.

The further price rises in October 2021 have compounded the April 2021 increases, resulting in 12-month inflation rates of 18.8% for electricity and 28.1% for gas. These are the highest annual rates for these classes since early 2009.

Rising petrol prices, and the cost of second hand cars, also drove inflation higher.

Average petrol prices were 138.6 pence per litre in October, compared with 113.2 pence per litre a year earlier.

That’s the highest recorded since September 2012, as the jump in crude oil prices fed through the pumps.

Used car prices jumped by 4.6% during October, and have surged by 27.4% since April 2021, as the shortage of semiconductor chips to build new cars pushed up demand.

The ONS adds that “restaurants and hotels, education, furniture and household goods, and food and non-alcoholic beverages” also made large upward contributions to higher inflation.

More details and reaction to follow….

Julian Jessop
(@julianHjessop)

Ouch!

UK CPI #inflation jumped to 4.2% in October (consensus 3.9%), from 3.1% in September, led by 22.3% surge in energy prices as Ofgem cap lifted.

Core measure (ex food & energy) also up though, to 3.4%.


November 17, 2021

Inflation’s a global problem right now, and hit a 30-year high of 6.2% in the US last month.

That helped to drive up spending on goods and services last month, as Ipek Ozkardeskaya, senior analyst at Swissquote, explains:


Yesterday was all about the US retail health, and the sales data looked good at the first sight. But in reality, it was mixed.

The US retail sales grew 1.7% in October, up from 0.8% printed a month earlier and better than 1.2% penciled in by analysts. That was the best month since March, however the jump was mostly because things costed more due to an inflation hovering around a three-decade high.

The good news is that people could spend more to buy less, the bad news is that an increasing number of people see their purchasing power hit significantly, the savings are melting and the most affected households’ pullback could, at some point, hit the headline number. As such, the strong retail sales data from the US is a half good news.

Inflation data from Canada, and updated numbers from the eurozone, will show how inflationary pressures are spreading.

We also get new US housing data, and the weekly oil inventory figures.

The UK’s FTSE 100 is set for a lower open, down around 0.3% premarket, while the US

IGSquawk
(@IGSquawk)

European Opening Calls:#FTSE 7303 -0.33%#DAX 16217 -0.19%#CAC 7153 +0.00%#AEX 827 +0.02%#MIB 27774 -0.11%#IBEX 9025 -0.17%#OMX 2384 -0.09%#SMI 12544 -0.10%#STOXX 4398 -0.09%#IGOpeningCall


November 17, 2021

The agenda

  • 7am GMT: UK inflation report and producer prices index for October
  • 9.30am GMT: UK house price index for September
  • 10am GMT: Eurozone inflation report for October (final reading)
  • Noon GMT: US weekly mortgage applications
  • 1.30pm GMT: Canadian inflation report for October
  • 1.30pm GMT: US building permits and housing starts
  • 2pm GMT: Bank of England policymaker Catherine Mann takes part in a JP Morgan podcast
  • 3.30m GMT: EIA weekly oil inventory figures





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