UK inflation peaks at 3.1%

The annual rate of change to UK inflation has peaked over 3% for the first time since 2012. The 3.1% figure is a full percentage point over the central banks long term inflation target of 2% and prompts Mark Carney, the Bank of England governor, to write a letter to Downing Street explaining why the central bank has missed its inflation target. The rapid rise of UK core inflation continues to be driven by the fall in the pound after the vote to leave the EU last year. Economists believe the 3.1% figure represents the peak of UK interest rates with economists predicting a normalisation from these levels over the next 2 years. Should inflation remain at these levels however, markets will be looking to the BoE for more hawkish rhetoric surrounding another interest rate rise in the UK over 2018.