Business

Inflation dips but rate rise still forecast

Written by The Frontier Post

LONDON (AFP/APP): British annual inflation eased to 3.1 percent in September, official data showed Wednesday, remaining close to a nine-year peak that still risks a UK interest rate rise next month.
The annual rate fell from 3.2 percent in August, which was the highest level since early 2012, according to the Office for National Statistics.
Despite the inflation rate easing, analysts still expect the Bank of England to next month raise its main interest rate from a record-low level of 0.1 percent.
“As the dip… still left inflation above the 3.0-percent rate the BoE forecast back in August, it’s unlikely to significantly reduce expectations that the BoE will raise interest rates before the end of the year,” said Paul Dales, chief UK economist at Capital Economics.
High inflation is weighing on companies and consumers globally, while rate tightening is used by central banks to try and dampen price rises.
“Global shocks have pushed up prices around the world, and we are working with businesses and international partners to address these pressures,” British finance minister Rishi Sunak said following the latest UK inflation data.
Prices of raw materials as well of finished products and services are rising sharply as economies reopening from pandemic lockdowns struggle with supply constraints.
Energy prices in particular are surging, in some cases causing companies to reduce or even temporarily pause operations.

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