UK CPI 2.3 in October vs Reuters poll 2.2
Bank of England had also expected 2.2
Underlying inflation measures rise too
Sterling jumps and investors trim BoE rate cut bets
BoE has stressed it will move gradually on rates

LONDON, Nov 20 Reuters British inflation jumped by more than expected last month to rise back above the Bank of England39;s 2 target and underlying price growth gathered speed too, showing why the BoE is moving cautiously on interest rate cuts.

Consumer prices rose by an annual 2.3 in October, pushed up almost entirely by an increase in regulated domestic energy tariffs, after a 1.7 rise in September which was the first time the inflation rate had fallen below the BoE39;s target since 2021.

Sterling strengthened by almost a third of a cent against the U.S. dollar after the data was published before giving back most of that rise. Interest rate futures priced in a slightly slower pace of rate cuts and bond prices fell.

The BoE39;s most recent forecast and a Reuters poll of economists had both pointed to a weaker CPI reading of 2.2.

James Smith, research director at the Resolution Foundation think tank, said a rise had been expected as last year39;s energy price falls dropped out of the annual calculation and the price cap increased in October.

But the clean sweep of higher headline, core and services inflation has delivered a triple dose of bad news for families and policymakers alike, he said.

The increase took inflation to a sixmonth high and…