CPI inflation unexpectedly spiked upwards last month to 2.3% from a low of 1.7% the previous month, ONS reported today.

Rising energy bills were the main reason for the increase.

The Consumer Prices Index (CPI), the UK's main inflation index, rose by 2.3% in the 12 months to October 2024, up from 1.7% in September.

On a monthly basis, CPI was up by 0.6% in October after being nearly static a year earlier.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.2% in the 12 months to October 2024, up from 2.6% in September.

On a monthly basis, CPIH rose by 0.6% in October 2024, up from 0.1% in October 2023.

ONS said the largest upward contribution to the monthly change in both CPIH and CPI annual rates came from housing and household services, mainly because of rising electricity and gas prices.

The biggest downward contribution came from recreation and culture.

Core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.1% in the 12 months to October 2024, up from 4.0% in September.

The CPIH goods annual rate rose from negative 1.4% to negative 0.3%, while the CPIH services annual rate was unchanged at 5.6%.

Core CPI (excluding energy, food, alcohol and tobacco) rose by 3.3% in the 12 months to October 2024, up from 3.2% in September; the CPI goods annual rate rose from negative 1.4% to negative 0.3%, while the CPI services annual rate rose from 4.9% to 5.0%.

Lower fuel and transport costs helped cut CPI inflation in the 12 months to September to 1.7% from 2.2% in August, the lowest level for three years.

The Bank of England recently warned that the risk of inflation spiking remained. 

The Bank of England’s long term CPI target remains 2%.

Industry experts said the suprise rise was a reminder that inflation was always a threat.

Daniel Casali, chief investment strategist at wealth manager Evelyn Partners, said: "The uptick in in October’s inflation number from September was led by a 9.5% hike in energy regulator Ofgem’s price cap for the fourth quarter.

"While the annual figure shows that inflation has ticked back above the Bank of England’s 2% inflation target rate, it is still within the acceptable 1% to 3% latitude, and the lid on inflation remains broadly intact.

"In the details, perhaps of most concern to the monetary policy committee is that services CPI inflation remains elevated at 5.0% year-on-year. Within services, there are still pockets of inflation in rents and a couple of new areas to watch out for where the embers of inflation could flare up.

"Education prices are set to jump as VAT on school fees are introduced in January, and sewage prices and vehicle excise duty could drive up services inflation from April."

‘All goods CPI inflation came in at -0.3% year-over-year, a narrowing from -1.4% in September, to reflect higher energy prices.