UK Faces Christmas Interest Rate-Hike Double Whammy Amid Inflation Surge

The comments from Nigel Green come as official figures show UK inflation jumped to 3.5% in September, up from 3.1% in August and above the 3.4% economists had pencilled in.

It's the third consecutive monthly rise and the highest annual rate in a year.

Motor fuel prices soared 29.8% in the year to September, up from around 23% in August and the steepest climb since the summer of 2022. Prices rose 0.4% in September alone, ahead of the 0.3% forecast.

Crucially, the pressure has spread well beyond the forecourt. Services inflation accelerated to 3.7% from 3.4%, while core inflation, which strips out energy, food, alcohol and tobacco, climbed to 2.8% from 2.6%, beating forecasts. Goods inflation reached 3.2%, its highest since September 2023.

Markets put the odds of a quarter-point hike to 4% next month at 98%, with most traders also expecting another rise in December.

Nigel Green predicts the Bank will deliver both, and believes rates are likely to stay elevated for much of 2027.

Britain now also stands out among its neighbours, with inflation running above both France at 3.4% and Germany at 3.3%.

The squeeze is likely to land hardest on stretched households. Real wage growth had ground to a halt even before the energy shock struck, and unemployment has hovered around 5% for much of the year.

Businesses face a similar bind, with higher energy and transport bills now set to be joined by dearer borrowing.

He believes the Bank's resolve is being shaped by the memory of its last inflation fight.

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