U.K. inflation accelerated more-than-expected to a near two-year high in September on higher clothing and transport costs.
Inflation rose to 1 percent from 0.6 percent in August, the Office for National Statistics said Tuesday. The rate was the highest since November 2014, when it was also 1.0 percent.
Inflation was expected to climb to 0.9 percent. Nonetheless, inflation continues to remain below the 2 percent target.
Similarly, core inflation that excludes energy, food, alcoholic beverages and tobacco increased to 1.5 percent from 1.3 percent.
The statistical office said there is no explicit evidence of pound weakness in consumer price changes, but it is influencing producer prices.
Consumer price inflation is seen moving markedly higher as sterling's weakness increasingly feeds through, IHS Global Insight Economist Howard Archer noted. However, the weakened UK growth and employment outlook means that domestic price pressures are likely to be limited.
Paul Hollingsworth at Capital Economics said inflation will breach the 2 percent inflation target around Spring next year.
Nonetheless, the economist said the monetary policy committee would not be worried too much as policymakers are willing to tolerate an overshoot of the target in order to focus on stabilizing the economy in the short run.
Data revealed that clothing and footwear prices advanced 1 percent and transport costs grew 1.2 percent. Meanwhile, prices of food and non-alcoholic beverages dropped 2.3 percent.
Monthly inflation eased marginally to 0.2 percent from 0.3 percent in August. Prices were expected to edge up 0.1 percent.
Another report from the ONS showed that factory-gate prices rose at a faster pace of 1.2 percent annually in September, following a rise of 0.9 percent in August.
This was the third annual increase since June 2014 and exceeded the expected rate of 1.1 percent.
On a monthly basis, output prices advanced 0.2 percent in September, in line with expectations.
Meanwhile, input price inflation eased more-than expected to 7.2 percent from 7.8 percent in August. Prices were forecast to gain 7.4 percent.
Month-on-month, input prices remained flat after rising 0.2 percent in the prior month. Economists had forecast a 0.4 percent increase.
The ONS said the increase in producer price inflation over the past several months could be partly attributed to the changes in the sterling exchange rate.
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December 26, 2025 08:42 ET Third quarter economic growth data from some major economies including the U.S. were the main news in this holiday shortened week. GDP growth and industrial production data from the U.S. helped to boost morale, while the consumer confidence survey results were less upbeat. In Europe, the quarterly economic growth data from the U.K. drew attention, while the minutes of the Australian central bank’s latest policy session was in focus in Asia.