Breaking: UK annualized inflation jumps to 11.1% in October vs.10.7% expected

UK CPI accelerates by 11.1% YoY in October vs. 10.7% expected.
Monthly UK CPI arrives at 2.0% in October vs. 1.7% expected.
GBP/USD jumps to test 1.1900 on a big beat to the UK CPIs.

The UK annualized Consumer Prices Index (CPI) came in at 11.1% in October when compared to 10.1% recorded in September while beating estimates of a 10.7% figure, the UK Office for National Statistics (ONS) reported on Wednesday. The index rose to its highest level since October 1981.

Meanwhile, the core inflation gauge (excluding volatile food and energy items) rose 6.5% YoY last month versus 6.5% seen in September, beating the forecasts of 6.4%.

The monthly figures showed that the UK consumer prices accelerated by 2.0% in October vs. 1.7% expectations and 0.5% previous.

The UK Retail Price Index for October arrived at 2.5% MoM and 14.2% YoY, outpacing estimates across the time horizon.

Additional takeaways (via ONS)

UK Oct Core CPI ex-energy, food, alcohol and tobacco 0.7% MoM.

Without energy price guarantee, CPI inflation would have been around 13.8% in Oct.

Food and non-alcolholic beverage CPI inflation highest since 1977.

FX implications

In an initial reaction to the UK CPI numbers, the GBP/USD pair jumped nearly 20 pips to test the 1.1900 barrier.

The pair was last seen trading at 1.1882, up 0.18% on the day. The US dollar holds steady in the early European morning.

Why UK inflation matters to traders?

The Bank of England (BOE) is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.