Key facts
- Annual inflation rate rose to 3.5% in September.
- The figure exceeded the Reuters poll median forecast of 3.4%.
- Energy prices, intensified by the Iran war, were the primary driver.
- Investors anticipate a Bank of England rate hike to 4% next month.
- The Bank of England had forecast inflation to reach 3.0% in July.
Britain's annual inflation rate increased more than anticipated to 3.5% in September, up from 3.1% in August, according to official figures released on Wednesday. The rise exceeded the median forecast of 3.4% from a Reuters poll of economists, who attributed the surge to intensified energy prices stemming from the Iran war. The Bank of England had previously projected a more modest increase to 3.0% in its July forecasts. Investors are now anticipating the central bank will raise its benchmark interest rate to 4% next month, marking the first increase in three years, as elevated energy prices persist.