UK inflation rose once again in October, up a percentage point from September to 11.1% year-on-year. Core inflation stayed steady at 6.5% year-on-year, with a large part of this coming from services. The continued rise in inflation gives the Bank of England (BoE) a headache, especially given private sector earnings growth accelerated to a 7.6% annualised rate. This suggests underlying price pressures from the labour market are not moderating - despite a tick up in unemployment, vacancies remain elevated. Rising inflation and wage demands do not tally with the BoE's message earlier in November that only modest further rate rises were needed to bring prices under control. Until weaker activity starts to weigh on the labour market, the BoE is likely to have to keep hiking.

Another rise in UK inflation puts pressure on the BoE

UK headline and core inflation, % change year on year