U.K. Inflation Reaches Fastest Since at Least 1997

UK inflation quickened to the fastest pace in at least 11 years in Sept., squeezing consumers with higher living costs as the financial market crisis curbed the availability of credit. Prices rose 5.2% from a year earlier, the most since records began in 1997, the Office for National Statistics said in London. The median forecast of 32 economists in a Bloomberg News survey was 5%. Inflation has now exceeded the Bank of England's 2% target for a year. The central bank cut the benchmark interest rate last week by half a point to 4.5% after an emergency meeting. The crisis of confidence in the banking system and lower commodity prices have raised the risk that inflation may slow below the target, a policy maker said. An economist at Fortis in Amsterdam and a former U.K. Treasury official said weakness in the economy will be more than enough to bring inflation to target. The recent reading isn't a barrier to further rate cuts. The bank is more worried about inflation undershooting the target now, he said. The pound was little changed at $1.7502 after the report. Stocks recovered for a 2nd day after the UK government bailed out banks including HBOS Plc and similar measures were adopted in Europe and the U.S.