British inflation rose to its highest level in more than five years in September, according to official data that could make the Bank of England more likely to raise interest rates next month. David Pollard reports.
They can look, but can't always buy. UK consumers increasingly outpaced by an inflation rate that's just hit a half decade high. After the UK's Brexit referendum, the battered British pound is back in the frame - as is the Bank of England. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "We had signalled prior to the referendum that we felt in the event of a vote to leave, one of the adjustment mechanisms would be through sterling. We - and this is a quote - we expected sterling to fall sharply. It did. That passes through to prices." A headline rate of three per cent for September now way above the Bank's target of two. On sterling down around 12 per cent since the vote. Food and transport costs are among the biggest risers. Even so, Carney has made clear the Bank expects to hike rates. Though his latest comments - on the same day as the data - concede the difficulty of doing so. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "We still face a trade off between having inflation above target and the need to support, the desirability, and this goes to a secondary objective, of supporting jobs and activity." Most economists in a Reuters poll see the Bank hiking next month. The November decision shaping up as moment of truth for Carney and his policymakers ... SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "There's still a possibility here that the BOE may duck this one. They've got some room for manoeuvre having said rates should rise in the next few months, so it does give them some wiggle room. But hopefully we won't see a repeat of the unreliable boyfriend experience from previous years where they talk about raising rates and then duck it at the last minute." But most economists also say it would be a mistake to raise rates now. Despite inflation that's squeezing household incomes, dampening growth ... And, for many, spoiling the appetite to spend.