UK inflation near 4% in September, complicating BoE rate cuts

The United Kingdom's annual inflation rate is expected to reach about 4 percent in the year to September, roughly double the Bank of England's two percent target, according to forecasters ahead of official data due from the Office for National Statistics on Wednesday. Economists say the rise, if confirmed, would mark the highest 12‑month rate in nearly two years and will complicate the timing of any near‑term interest rate cuts.

A range of forecasters put September inflation between roughly 3.9 and 4.1 percent, with core inflation, which strips out volatile food and energy components, also forecast to edge up. Several firms and polls pointed to clothing, fuel and airfares as contributors to the headline increase, but many analysts cautioned that much of the jump may reflect base effects from unusually weak prices in the same month last year rather than an abrupt acceleration now.

Capital Economics estimated clothing, fuel and airfares each added about 0.1 percentage point to annual inflation in September, and said the rise is likely to be short lived. The firm also noted that a two percent reduction in Ofgem's energy price cap on October 1 and a likely fall in pump prices as oil...