Inflation remains at five-year high

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Inflation held steady at 3% during October, according to the Office for National Statistics.

The UK’s key measure of inflation, the Consumer Prices Index, remains at a five-year high.

The news will come as a surprise to many economists who had predicted a rise following increased food price hikes.

Many analysts had predicted an increase to at least 3.1%, which would have led to Mark Carney, the Bank of England governor, having to write to Chancellor to explain why he thought the Consumer Price Index had risen above 3%.

The Bank of England’s inflation target is 2%. It raised interest rates earlier this month after predicting inflation would hit 3.2% in October.

The news comes as the CBI warns that even with the modest economic growth that the Bank are expecting, they still forecast inflation to remain above target in three years. This suggests that, going forward, rates could rise at a faster pace than financial markets currently expect (markets are pricing in around two rate rises over the next three years).