UK inflation hits highest level in a decade

Today’s print has revealed that the UK inflation rated has soared to 5.1%, far outstripping expectations, and reaching its highest level in over ten years. The result, which beat economists’ predictions of 4.8% and the Bank of England’s 4.5% expectations represents the sharp rise in fuel, clothing, and second-hand car costs. Tobacco duty also helped to drive up inflation for the month. Inflation is expected to remain close to 5 per cent until April, when the next rise in the energy price cap will lead to another jump. The IMF on Tuesday expected the rate to peak at 5.5 per cent, but economists have been surprised almost every month this year by inflation rising faster than they thought. All of this points toward the Bank of England’s interest rate decision tomorrow with the current view that Omicron will make it hard for them to raise rates, again.