UK Inflation Holds at 40-Year High of 6.7% in September, Keeping Pressure on BoE for Further Rate Hikes

UK inflation held steady at 6.7% in September, remaining the highest in the G7 and keeping alive the possibility of another BoE rate hike. A rise in petrol prices was the main factor stopping a fall.

Core inflation and services prices - indicators closely watched by the BoE - were robust, suggesting persistent underlying inflation pressures.

Financial markets judged another BoE rate rise is more likely than not, though not necessarily in November. The data still leaves CPI below the BoE's August forecast.

Food prices rose 12.1% year-on-year, impacting poorer households. Services inflation hit 6.9%, driven by hotel costs.

CPI is expected to drop sharply in October as the impact of higher energy prices from a year ago falls out of the calculations. But inflation likely to remain above the BoE's 2% target until 2025.