UK Inflation Hits 3.5% on Fuel Surge, Cementing November BoE Rate Hike Bets

U.K. consumer price inflation rose to 3.5% in the year to September, its highest reading since October last year, as the Iran war drove fuel costs higher and reinforced market expectations the Bank of England will raise interest rates on Nov. 5. The Office for National Statistics said the reading climbed from 3.1% in August and exceeded the 3.4% forecast by most economists, pushing inflation further above the central bank's 2% target. Transport was the largest contributor, with motor fuels surging 30% year-on-year, up from 23% in August, as bottlenecks in the Strait of Hormuz squeezed global oil and gas supplies. Rate-setters held the main rate at 3.75% last month but signaled a near-term hike; most economists expect an increase to 4%. Treasury chief John Healey said next week's budget statement will aim to give households and businesses "some breathing space" from rising living costs.