British inflation hits 10-year high, bolstering rate hike bets

"The main upward pressure came from electricity, gas and other fuels," the Office for National Statistics said. The BoE is expected to become the first of the world's major central banks to raise rates since the coronavirus pandemic swept the global economy, with investors and economists increasingly predicting that will happen on Dec. 16.

British inflation surged to a 10-year high last month, according to data on Wednesday that will bolster expectations that the Bank of England will raise interest rates next month.

Consumer prices rose by 4.2% in annual terms in October, accelerating from a 3.1% increase in September. Both the BoE and a Reuters poll of economists - none of whom had predicted such a big increase - had pointed to a reading of 3.9%. "The main upward pressure came from electricity, gas and other fuels," the Office for National Statistics said.

The BoE is expected to become the first of the world's major central banks to raise rates since the coronavirus pandemic swept the global economy, with investors and economists increasingly predicting that will happen on Dec. 16. On Monday BoE Governor Andrew Bailey said he was "very uneasy" about the inflation outlook and that his vote to keep rates on hold earlier this month, which shocked financial markets, had been a very close call.

On Tuesday, data suggested Britain's labour market was withstanding the end of the government's job-protecting furlough scheme, a key factor for the BoE and its decision on rates.