UK inflation hits highest rate in 3 years

LONDON: Britain's inflation rate jumped to a three-year high of 5.2 percent in September, a bigger than expected increase driven by rising costs for electricity and gas, official data showed Tuesday. The consumer price inflation rate announced by the Office for National Statistics was a big jump from the 4.5 percent reported a month earlier and beat the market consensus of 4.9 percent. At a time when average weekly earnings are just 1.8 percent higher than a year ago, household electric costs rose 7.5 percent and gas leaped 13 percent in one month, the agency said. Clothing and footwear prices rose by 4.4 percent. The main downward pressure came from a decrease in air fares. Inflation last hit 5.2 percent in September 2008. This was the 22nd consecutive month that inflation was above the official target of 2 percent. The Bank of England has forecast that inflation would peak above 5 percent before reversing toward the target. "The September figure should represent a peak in the rate of inflation," said Chris Williamson, chief economist at financial information company Markit. Year-to-year increases in petrol prices and sales taxes will flatten out between now and January, and commodity prices have eased, he noted. The inflation data will be unwelcome to the government just as unemployment has reached a 17-year high, because the September rate is used to adjust benefit payments. Lately, the Bank of England has been more worried about the sluggish growth of the UK. economy than about inflation, and last month its Monetary Policy Committee decide to spend another 75 billion pounds ($118 billion) on quantitative easing, a program that hopes to stimulate the economy through asset purchases.