The Bank of England is expected to raise interest rates for the 11th time in a row on Thursday after a surprise jump in inflation dashed speculation that it might have been about to go on pause.
While some of the increase in the headline rate of British inflation announced on Wednesday was due to potentially one-off factors such as cold weather in Spain and North Africa which caused vegetable shortages, the underlying inflation measures that the BoE watches also rose.
Pay growth is cooling but still running far above its historical average and shortages of workers remain acute which threatens to keep inflationary heat in the labour market. BoE Governor Andrew Bailey and his colleagues last month dropped language saying that they were ready to act forcefully if the outlook suggested persistent inflationary pressures.
ING economist James Smith said he expected a rate hike on Thursday was likely to prove the last in the BoE's run.
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