UK inflation for October is due on Wednesday. The Bank of England expects it to rise

What's coming

The Office for National Statistics publishes UK consumer prices for October on Wednesday 18 November, at 07:00 London time (15:00 in Singapore). In September, prices were 3.5% higher than a year earlier.

The Bank of England's November Monetary Policy Report implies inflation of about 3.73% in October, according to Newsquawk, with core inflation, which excludes energy, food, alcohol and tobacco, at 2.9% (from 2.8%) and services at 3.9% (from 3.7%). The Bank expects inflation to keep rising, towards a peak near 5% in mid-2027, as higher energy costs feed through to household bills.

Why services matter most

Energy prices push the headline rate up and down, but they mostly come from abroad, and interest rates do little to change them. Services prices, from haircuts to insurance, depend mainly on wages and domestic demand. If they rise faster than expected, it suggests the energy shock is spreading into the rest of the economy, the second-round effects the Bank raised rates to prevent. Our mechanic on inflation and rates explains why.

Tuesday: jobs and pay

The day before, the ONS publishes labour market figures. Unemployment was 4.7% in the latest release. Pay growth matters most for the Bank: fast-rising wages feed services inflation.

What it means for rates

The Bank raised Bank Rate to 4% on 5 November by 8 votes to 1 (our story). Its next decision is on 17 December. A figure close to its forecast keeps the debate open; a clearly higher one strengthens the case for another rise. The economy grew 0.7% in the third quarter (our story), so weak growth is not holding it back.

Where it sits in the chain

This is Link 1, inflation and policy rates: the energy shock raises headline inflation; whether it spreads into services decides how far rates go.