Free Trial

Inflation in UK unchanged at 6.7% in September, still way more than Bank of England's target of 2%

A man walks past the Bank of England, at the financial district in London, on May 11, 2023. Homeowners across the U.K. are hoping that the Bank of England will decide to avoid raising interest rates for the first time in nearly two years. Following news that inflation fell unexpectedly in August to its lowest level since Russia invaded Ukraine, expectations have grown that the central bank will opt Thursday, Sept. 21, 2023, to keep its main interest rate unchanged. (AP Photo/Frank Augstein)

LONDON (AP) — Inflation in the U.K. held steady at 6.7% in September as easing food and drink price rises were offset by higher prices at the pump for motorists, official figures showed Wednesday.

The flat reading reported by the Office for National Statistics was disappointing as most economists had predicted another, albeit modest, fall.

It means that the U.K.'s inflation rate remains more than three times higher than the Bank of England's target rate of 2%. The bank, though, is not expected to raise interest rates at its next policy meeting in early November, opting instead to keep its main borrowing rate unchanged at the 15-year high of 5.25%.

Last month, the bank brought an end to nearly two years of interest rate rises as inflation fell from multi-decade highs above 11%.

Most economists expect a sizeable decline in inflation next month.

“Progress on falling inflation has stalled, for one month at least," said James Smith, research director at the Resolution Foundation think tank. “It should fall sharply next month to below 5%, as energy prices fall for most people.”

The Bank of England, like other central banks, has raised interest rates aggressively from near zero as it sought to counter price rises first stoked by supply chain issues during the coronavirus pandemic and then Russia’s invasion of Ukraine, which pushed up food and energy costs.

Higher interest rates, which cool the economy by making it more expensive to borrow and bearing down on spending, have contributed to bringing down inflation worldwide. Though most economies have avoided falling into recession, fears remain that the British economy could start to see output shrinking in coming months, hardly the best backdrop for the governing Conservative Party ahead of a general election.

The U.K. has the highest inflation rate among the Group of Seven leading industrial economies — the U.S.'s rate for example is 3.7%.

Some economists attribute that to Britain's departure from the European Union, which has created worker shortages in some sectors and frictions in trade, raising costs for businesses.

The flat reading will raise concerns, certainly among homeowners, that rates will stay higher for longer. Because there is a lag between actual rate hikes and mortgage rates, lots of homeowners and renters have yet to see increases in their housing costs.

Unlike in the U.S., for example, most homeowners in Britain lock in mortgage rates for only a few years, so those whose deals expire soon know that they face much higher borrowing costs in light of the sharp rise in interest rates over the past couple of years.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

Elon Musk's Next Move Cover

Explore Elon Musk’s boldest ventures yet—from AI and autonomy to space colonization—and find out how investors can ride the next wave of innovation.

Get This Free Report
Like this article? Share it with a colleague.

Featured Articles and Offers

Recent Videos

5 Stocks to BUY NOW in August 2025
The $2.5B Merger No One Is Talking About
ALERT: Big Tech Earnings – Watch Before Wednesday

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines