UK inflation rises above 2% target in blow to Keir Starmer

UK has risen to its highest level since April, driven by an increase in household , according to official figures.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation rose to 2.3% for October from 1.7% in the previous month.

This marks the sharpest month-on-month rise in the inflation rate in two years. It also exceeded expectations, as economists had forecast a reading of 2.2% for the month.

The rebound, which could increase pressure on the Bank of England to delay cuts to interest rates, comes after CPI inflation dropped to a three-year low in September.

The ONS said an increase in household energy costs particularly contributed to the latest rise in inflation.

In October, average household energy bills increased by £149 a year after regulator Ofgem raised the price cap by around 10%.

Grant Fitzner, chief economist at the Office of National Statistics (ONS) said: "Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity, compared with a fall this time last year. These were partially offset by falls in recreation and culture, including live music and theatre ticket prices."

However, he noted: "The cost of raw materials for businesses continued to fall, once again driven by lower crude oil prices."

The data showed that a rise in airfares also helped push inflation higher, with fares rising 6.6% in October compared with the previous month. Transport inflation was, however, lower overall, as this was offset by a drop in motor fuel prices.

Treasury Chief Secretary Darren Jones acknowledged there was "more to do" to ease cost-of-living pressure. He said: "We know that families across Britain are still struggling with the cost of living.

"That is why the Budget last month focused on fixing the foundation of our economy so we can deliver change. That includes boosting the national minimum wage, freezing fuel duty and protecting working people's payslips from higher taxes.

"But we know there is more to do. That is why the Government is focused on economic growth and investment so we can make every part of the country better off."

Some argue that Chancellor Rachel Reeves's Budget, which includes tax hikes to address a £40 billion deficit, could drive inflation higher in the coming months.

Shadow chancellor Mel Stride warned the impact of the Budget would only push inflation up higher. He said: "Having brought inflation back down to target, we know how important it is for all of us that the Government does the same.

"What is worrying about today's announcement is that inflation is running ahead of expectations and official forecasts state these figures are not expected to improve. Labour's Budget will push up inflation and mortgage rates."

Scott Douglas, capital markets director at international corporate finance firm , commented: "Despite the recent interest rate cut and the downward trajectory of inflation, a number of potentially inflationary forces have been unleashed."

"Factors from the recent Autumn Budget such as National Insurance Contribution hikes, Trump's election win and the potential rise in import costs stemming from tariffs coupled with the strengthening of the US Dollar could all have a significant impact. Ongoing conflict in the Middle East and the recent escalation between Russia and Ukraine has caused geopolitical risk to return to the energy markets, and the prospect of further energy price rises will drive inflation upwards - despite falling wage growth figures."

"As well as heightened inflation, markets are now expecting interest rates to remain higher for longer - meaning we could be staring down the barrel of an economic Groundhog Day."

Alastair Douglas, CEO at TotallyMoney, added: "While it's hardly been a nightmare before Christmas, it's not been a dream start for the new Government. Since the Autumn Budget, we've heard that unemployment, mortgage rates, and repossessions are creeping up. We're now waiting to be told that energy bills will increase again in January, while retailers are warning that tax hikes will further drive inflation and job losses.

"Following five turbulent years, people need stability and hope, but they say bad luck comes in threes. Whatever the case, the Prime Minister and his cabinet need to show that what they're doing is having a positive impact - and that there's light at the end of this long, dark tunnel."

Some economists predict the will hold off from its widely anticipated third cut to central in December due to the latest figures. The Bank's Monetary Policy Committee (MPC) reduced the Base Rate from 5% to 4.75% in October, and many expected another 0.25% reduction next month.

The has used high interest rates to curb consumer and business spending and help bring down inflation, which soared as high as 11.1% two years ago.

Rate-setters on the MPC have since voted twice to reduce rates after bringing inflation down to target levels earlier this year. However, these reductions are based on the expectation that inflation will stay low.

Suren Thiru, economics director at The Institute of Chartered Accountants in England and Wales (ICAEW) commented: "These figures confirm a disappointing resurgence in inflation as the recent tailwind from lower energy costs turned into a headwind in October, following the increase in Ofgem's price cap which drove a notable jump in household bills.

"Inflation should drift gradually higher from here with rising energy bills, the impact of the Budget and global trade frictions likely to keep the headline rate hovering above the Bank of England's 2% target until well into 2025.

"While the slight uptick in services price pressures confirms that it remains a significant hurdle to sustainably maintain inflation below target, slowing wage growth and a weakening labour market should help put it on a more consistent downward trajectory."

However, he noted: "October's marked rise in inflation makes a December interest rate more unlikely and concerns over renewed price pressures from the budget and international uncertainty may draw a more reluctant approach among rate setters to future policy loosening."