UK inflation jumps to 3.5% ahead of budget

· Economy · United Kingdom

UK inflation accelerated to 3.5 percent in the 12 months to September from 3.1 percent, according to the Office for National Statistics, a hotter-than-expected reading driven by higher petrol and diesel prices. Government borrowing was also the highest for a year, figures released on Oct 21 showed, illustrating the constraints on Chancellor John Healey as he finalises his first budget. Healey said he will aim the budget at "bloody-minded entrepreneurs" by cutting the cost of business. The inflation data cemented expectations of an interest-rate hike.

Why it matters：Sticky UK inflation alongside record borrowing leaves the government squeezed between rate expectations and budget promises, with global bond markets watching.

Key points

  • Inflation rose to 3.5 percent from 3.1 percent.
  • Motor fuel costs drove the increase.
  • Government borrowing hit a one-year high.

Sources (original reporting)

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