UK Inflation Expected to Hit 3.4% as Markets Price in November Rate Hike

Key Facts

1UK headline CPI is expected to rise to 3.4% y/y in September, up from 3.1% in the previous month.

2Markets are currently pricing in a 96% probability of a 25 bps rate hike by the Bank of England in November.

3Core CPI is expected to reach 2.8%, driven by persistent energy costs and service price pressures.

UK headline CPI is expected to rise to 3.4% year-on-year in September, up from 3.1% in the previous month, according to investinglive.com. Markets are currently pricing in a 96% probability of a 25 basis point rate hike by the Bank of England in November. Core inflation is also projected to reach 2.8%, driven by persistent pressures from energy costs and service pricing.

These expectations follow recent economic data showing a resilient labor market, with the unemployment rate reported at 4.7% on October 20, 2026, outperforming the 4.9% forecast. Additionally, monthly Gross Domestic Product grew by 0.1% on October 15, 2026, while the three-month average GDP held at 0.7%, providing a complex backdrop for monetary policy ahead of the official inflation release.

The UK Services PMI is scheduled for release on October 23, 2026, with a forecast of 51.8. Investors are also awaiting annual Retail Sales data on the same day, which is expected to show a 1% increase.