• UK CPI rises by 4.2% YoY in October vs. +3.9% expected.
• Monthly UK CPI arrives at +1.1% in October vs. +0.8% expected.
• GBP/USD catches fresh bids towards 1.3500 on upbeat UK CPIs.

The UK Consumer Prices Index (CPI) 12-month rate came in at +4.2% in October when compared to +3.1% booked in September while beating expectations of a +3.9% print, the UK Office for National Statistics (ONS) reported on Wednesday. 

Meanwhile, the core inflation gauge (excluding volatile food and energy items) rose by 3.4% YoY last month versus +2.9% registered in September, outpacing the consensus forecast of +3.0%.

The monthly figures showed that the UK consumer prices arrived at +1.1% in October vs. +0.8% expectations and +0.3% prior.

Main points (via ONS):

“The largest upward contribution to the October 2021 CPIH 12-month inflation rate came from housing and household services (1.23 percentage points), with further large upward contributions from transport (1.08 percentage points) and restaurants and hotels (0.43 percentage points).”

“CPIH increased by 0.9% on the month in October 2021, compared with no change in October 2020.”

“Housing and household services made the largest upward contribution to the change in the CPIH 12-month inflation rate between September and October 2021, with further large upward contributions to change from several divisions, including transport, restaurants and hotels, education, furniture and household goods, and food and non-alcoholic beverages.”

FX implications:

In an initial reaction to the upbeat UK CPI numbers, the GBP/USD pair popped nearly 35-pips to test 1.3470 highs.

The spot was last seen trading at 1.3459, still up 0.23% on the day.